So, what’s actually going on in your brain when you decide to make a purchase? Well, science is getting us closer to knowing just that. A new study was published in Science Direct called Neural Predictors of Purchases. You have to purchase the full article, but a good writeup is at Ars Technica.
Basically, your brain registers potential reward, gain, and pain sensations that help you decide whether to make a purchase or not. The process was as followed: A person first saw the item, then a few seconds later saw a price, and then a few seconds later made a purchase decision. Very much the style of purchasing at the grocery line where stores wallpaper the entrance of the checkout with magazines, candy, and other crap you most likely don’t need or you would have already picked it up.
How this plays out in the brain seems to make sense. You see an item and decide if you’d even want it or not, no matter the price. The part of the brain that registers potential reward is set off. When you couldn’t care less about a purchase, this part doesn’t register much, if any, activity. Then you see the price, and the parts of your brain that perceive gain and pain kick in. If you’re going to make a purchase, then the gain part of your brain starts rising and tops out when you make the purchase, and the part of your brain that registers pain drops and stays down. Purchase made. On other hand when you aren’t going to make a purchase, besides no potential reward being registered, the pain part drops when the price is shown, but it jumps back up when it’s time to purchase. When you don’t really want to buy or the price is too high, your pain meter tells you that the purchase is more than you really want.
Going back to what I wrote in Your brain on credit, credit reduces the perceived pain sensation when you defer the full payment, or so I hypothesize as I haven’t found any hard science backing this up, but my gut tells me I’m right. Additionally, controlling your spending habits using a budget doesn’t help as much as a more natural process would. In order to control yourself with a budget, when you’re making a purchase, you have to recall what your budget is and where you are in that budget (and your goals in total). So, unless you’re studying that thing every day, you probably won’t really remember it meaning you’re much less likely to take it into consideration when you actually make a purchase.
What can you do if you want to control you spending habits? Most of the problems will happen because the habits you want or need to change are just that, habits. You do them as a fall back and without much thought. Generally, throwing extra time into the equation will disrupt any moment’s quick decision, which as you can see above is how many decisions are made. But my advice wouldn’t be, “Don’t buy that without walking around for 5 minutes,” but, “Don’t buy that if you didn’t come to buy it and see if you still need or want it tomorrow.” There’s nothing like sitting on a question for a night to really see what matters. If it really was an impulse, then you probably won’t think much of it by the next day. Otherwise, you’ll get some sleep processing power working on it, and you’ll potentially have more clarity when you wake up.
That won’t solve all or everyone’s problematic purchasing habits, but it gives you a chance to control it better. Set some hard and fast rules like that, and make new habits as a counteractive measure. The ultimate situation is where you can trust your habits and don’t need any other mechanisms like budgets to help guide you. Managing your money, which means managing your money goals, habits, and mentality, takes little time and complexity (the less the better), and understanding how you work, even if it seems as common sense as the science above, is key to doing that instead of forcing painful practices on yourself like budgeting.
What you DO affects what you THINK