4 shopping behaviors you need to pay special attention to if you want to spend more wisely

Why do lipstick sales spike when the economy is down?

Can kicking the habit of buying coffee every day really help you buy a car?

Buy on sale, are you actually spending more?

And much more than that. In this article, let’s talk about shopping knowledge that many people still don’t know.

01.

Discount shopping costs you more money

There are two red and blue buttons in front of you. If you press the red button, 100% you will get 1 million cash. If you press the blue button, you have a half chance of getting 3 million cash and a 50% chance of not getting any.

Can only choose 1, will you choose red or blue?

In fact, mathematically, the expected return for the red and blue nodes would be:

Red: 1 million x 100% = 1 million

Blue: 3 million x 50% + 0 x 50% = 1.5 million

Obviously blue has a higher expected rate of return. That means pressing the blue button is more cost-effective. But many people choose red because if you press blue, you may not get 1 million in cash.

Before the discounts, we will have the thought that if we don’t buy now, we need to spend more money to buy it later, isn’t that a loss? Leads to buying a lot of non-essential items.

Retailers know this very well, so they constantly run discounts. Many brands also increase the price of products before reducing the price to deceive consumers, stimulate demand to buy even though the fact is that the reduction is not much, or nothing at all.

02.

Impulsive spending

Any buying behavior that is determined by external factors without prior planning is called impulsive spending. In fact, everyone knows that this way of spending will consume their assets, so avoid it as far as possible. But sometimes it’s still inevitable that there are times when you can’t control yourself.

Simple example: You want to go to the supermarket to buy cooking ingredients. Suddenly you smell the aroma of milk tea, run to buy a cup. Spending on bubble tea is impulsive spending.

For another example, you just bought 5 sets of clothes. But yesterday on the way home, heard the store’s loudspeaker “30% off” and couldn’t resist. You keep buying more discounted clothes. This purchase only costs more money that should not be spent instead of saving as you think.

03.

“Latte factor” expenses

You’ve asked the question: “I don’t buy luxury goods, I don’t buy cosmetics, my income is not low, but I can’t save any money every month. Where has my money gone?”

Do you drink a cup of coffee every day? Is it because it helps you focus on work? Try to calculate according to the price of Starbucks, 1 cup of coffee costs 80,000 VND. Every day 1 cup like that, 1 month you spend 2.4 million. 1 year will cost 29 million.

If your husband is the same, two people a year will cost 58 million. 5 years will cost 300 million. This amount is enough to buy a car of Hyundai Grand, Kia Morning, Toyota Wigo, Mitsubishi Attrage…

Everyone has some habitual expenses, such as fees for inter-bank withdrawals, a cup of tea or coffee, snacks every day, etc.

These expenses are called “Latte factors” – small amounts that we often don’t pay attention to.

The way that sellers use to “trap” consumers is such small but frequent expenses.

This is why, your salary is very high, but you always feel short of money.

“Latte Factor” – like a thief, empty your wallet unconsciously.

04.

Lipstick Effect

The term “lipstick effect” first appeared during the economic recession that took place between 1929 and 1933 in the United States. At that time, people’s income decreases, so they will give up high consumption items such as buying real estate, cars, and luxury goods.

This way, there will be “a little extra money”. To satisfy consumer demand, they will switch to buying some non-essential products with lower unit prices, such as cheap cosmetics such as lipstick.

The lipstick effect is when consumers still spend money on petty purchases during an economic downturn or when they personally have little money.

They can’t afford to spend on luxury items. Still, save money to spend on small value items, such as lipstick. For this reason, companies that benefit from the lipstick effect tend to recover even during economic downturns. During the 2008 economic crisis, L’Oreal’s first half sales increased by 5.3%. This is one of the effects of the lipstick effect.

Can you look back at the early days of last year’s outbreak and find yourself buying more “cheap and unnecessary” small items than usual? The lipstick effect has become a recipe in the shopping industry.

4 little knowledge about consumer behavior has ended, hopefully can inspire you about managing your spending better. Because making money is hard, spending it properly is even harder.

Photo: Collectibles