Friday, November 25, 2011

Some holiday shopping tips

The worldwide economy is still shaky, and retailers are hoping that the holiday shopping season will help to improve their revenues.  The stores are working hard with sales and other promotions to encourage you to buy more.  If you are planning to do some holiday shopping for your family and friends (and yourself), how can you take advantage of holiday deals without breaking your budget?

To think about shopping smart, we have to start by remembering that there are two main modes of thinking that we engage when we are making decisions.  The “cool” mode is the one in which we are able to plan, to think about the features of products, and to weigh options.  The “hot” mode is the one in which our emotions and motivations drive the decision. 

Now, here are some ways to help you stay on budget.

1)  First, make sure that you actually set up a budget for holiday shopping.  It is amazing how often people enter into the holiday shopping period without thinking specifically about how much they want to spend for the year.

It makes sense that we don’t want to think about our budget.  If money is tight, then thinking about how much (or perhaps how little) there is to spend on gifts is unpleasant.  And who wants to think about unhappy things as we enter the holiday season. 

But if you don’t set a budget, you are courting a disaster in the long-term. Better think responsibly and set an amount that you plan to spend.  If you think that you’re likely to go over budget, then set your initial budget a little low.

When you set your budget, decide both how much money you want to spend and also how you want to distribute that money.  That is, make sure that you have thought through all of the people on your gift list.  Nothing can pinch your budget more than realizing at the last moment that you have forgotten gifts for key relatives or friends.

2)  Your hot mode of thought is not going to help you stay on budget.  The hot mode works by driving you to fulfill a goal that you have.  So, when you see something exciting in the store, the hot mode becomes active and seeks a way for you to get what you want.  One way that the hot system does that is by causing you to devalue your budget.  That is, keeping to your budget will seem less important while you are in the throes of desire for that great new flat-screen TV than it seemed before you got to the store.

When you find yourself tempted to break your budget by a very desirable item, the first thing you should do is to walk away.  The TV (or whatever it is) will still be there when you get back later.  And the stores need your business.  The prices will still be good tomorrow or next week. 

By walking away, you allow the hot mode to lose some of its energy and you give your cold system more chance to take over and influence the decision.  If the TV still seems like a good idea when you have had a chance to think about it, then you can decide to change your budget. 

3)  If you find that you have trouble with impulse purchases, consider making all of your purchases in cash.  That is, one way to get around the hot mode of thinking is to structure your world in a way that will help you to keep to your budget.  Bring only the amount of cash to the store that you plan to spend.  Once you run out of cash, you’re done.

4)  Finally, remember that while it is great to give and receive gifts at the holidays, in the end it is just stuff.  Stuff is fun to get.  But it will not change the lives of the people you’re buying for, and it won’t make you or anyone else that much happier in the long-run.  In fact, all of the research on happiness suggests that the best predictor of how happy you will be in 6 months is how happy you are right now.  The little pleasures in life (like gifts) might lift someone’s mood temporarily, but not for long.  Even really big positive events (like winning the lottery or falling in love) don’t affect people’s overall happiness that much in the long-run.

So, buy gifts, but do it within your budget.  Enjoy your family at the holidays.