Institute of Consumer
Financial Education
Institute of Consumer
Financial Education

Spending By Choice

A Unique, Fun Way To Reduce "Buyer Remorse"

By Loren Dunton, (1918-1997) "The Father of Financial Planning"

To Spend the Money or Not To Spend the Money? To Buy It or Not To Buy It? These are not the questions if we are really debating whether to purchase something or not. Can we expect our better judgment to "win out" over the prospect of having something or not having something? Usually, we cannot. Impulse spending which we regret is bad enough, but there is also another kind of spending.

We are looking at a new coat...
should we buy it, or not?
We are thinking about a new compact disc player...
should we buy it or not?
We listen to the salesperson extol the features of a new Walkman...
yes or no?
We are deciding to spend that twenty,
perhaps thirty dollars, or not?

We've all been there... a hundred times, a thousand times! All too often we will have annoying feelings afterwards, often subconscious, that we could have used that money to better advantage. It is usually vague; not a conviction, just a feeling. It does tend to spoil the pleasure we might have otherwise gotten with the purchase. Worse than that, it leaves us without the money, money that could have been used for wiser purchases, or for saving or an investment program.

How do we avoid a habit of impulse spending or other spending we regret? Unfortunately our spending habits can almost never be broken. Nor can they be pulled out like an aching tooth. Breaking a wasteful spending habit is usually no more successful than breaking any other bad habit. It has to do with a vacuum.

Our high school physics demonstration showed us how a vacuum tries to fill itself. When we try to rid ourselves of bad spending habits ... we create a vacuum. We know that what goes into that vacuum at the very first opportunity is the same bad spending habits. There is a solution, an approach that works far more effectively than trying to break the costly habits. We call it SPENDING BY CHOICE.

Instead of saying to ourselves, "Should we spend this money or not?, " we should say, ""These are dollars I'm going to spend. Am I sure this is how I want to spend them?" This can be a Positive Holding Action.

"Maybe I should not spend this money" we say to ourselves. However this is what the Institute of Consumer Financial Education calls negative input. As such, it's easy for the mind to ignore or rationalize so we can make the purchase.

We are on the way to SPENDING BY CHOICE; when we implement a Positive Holding Action, by merely asking ourselves HOW we want to spend it ... instead of asking if we would. Our instinct to SPEND is satisfied. We are not trying to break a habit. We don't have to overcome psychological resistance. This is Step One in learning to SPEND BY CHOICE.

Step Two is to give ourselves some choices. What else could be purchased that we have wanted or needed for a long time, with the same amount of money? With that thought process we have given some control to Logic, a mental process we all have. Unfortunately we often become addicted to impulse, spending, wants ... but not needs.

A lady once told me, "The suit I was thinking of had been priced at $300. The second time I tried it on, it had been reduced to $195. My immediate reaction was to buy it and save that $105. It is exactly what I had been doing for almost 20 years, and I have the closet to prove it. Then I remembered your SPENDING BY CHOICE formula for saving money. Right away I thought of three different things that cost about as much. Two of them, in more logical moments, were things I ranked ahead of the suit when I thought about it."

She went to confirm how easy it was to say NO, when she was really saying YES to something she wanted even more. That's the way it works and that's why it works. Why not decide right now to try SPENDING BY CHOICE. If you form this habit and develop this ability while you are younger, it can be worth a fortune. Don't be fooled that this rather easy technique is too simple. Simple solutions often work much better than more complicated solutions.