A Simple Way to Overcome Spending Temptations

By Markets Fool.com

If you've ever been sucked into the vortex of flash sale websites, you know all about scarcity. Not only are there limited quantities of sometimes wildly marked-down products -- on everything from baby toys to designer bags -- but these offers are only around for a limited time.

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Or imagine this: you're house-hunting, and suddenly find yourself face-to-face with the perfect house. It is, in the words of your spouse, the one. Suddenly, all your resolutions about not maxing out your mortgage approval goes out the window. You have to have that particular house.

Bad spending decisions can often be traced back to the way our brains react to scarcity, and unfortunately marketers and real estate agents are well aware of this. So how can you overcome this psychological money abyss? With a simple trick of your own.

What is scarcity?
First, it helps to understand the nature of the problem.

Marketers and real estate agents know something that most of us aren't aware of: that we humans are very responsive to the fear of shortage. When we feel that something might run out, it stresses us out and increases the perceived value of whatever commodity we're dealing with.

For example, one study looking at Princeton undergrads gave participants either ample or limited time to play a "Family Feud"-like game. The experimenters then offered the players a "loan" in the form of extra time, payable by earnings from the game. In another condition, no loans were offered.

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Guess who performed the worst? The time-poor students with access to loans used them much more than the time-rich students, and they performed the worst out of all the groups. In other words, something about not having much time and having a "way out" stressed these students out and triggered a desire to get rid of the scarcity through the loans. Unfortunately, they ended up shooting themselves in the foot and earned less than everyone else.

The same applies to our daily lives. Limited time offers at car dealerships, the few options on the rack at a luxury store, and the one-time discount that expires in two days are all examples of the ways retailers create scarcity, which makes you feel like you have to do something in order to prevent a shortage.

All you have to do is pull out your credit card, and the shortage is averted.

Fight back with abundance
It's actually ironic if you think about it: marketers almost have to tap into our fear of shortage because, generally speaking, we Americans have plenty of everything. There's very little risk that Costco will run out of industrial-size packs of socks or that Gilt.com will never get designer Hammer Pants back in stock (I'm referring, of course, to the legendary MC Hammer and his eponymous pants, which were back in fashion recently). There's also little risk that you'll never find another house you like or that you won't be able to get the same car some other time.

In other words, we have abundance. There is plenty of competition to sell you all the stuff you need, and plenty of time to buy it.

Realizing that there is abundance in your world is the first step to freeing yourself from the clutches of marketing and sales tactics. Remind yourself that you have plenty of options, and if you're tempted by something that's not in your budget or on your shopping list, take a step back and sleep on it.

Once you step away from the brink of a purchase decision, you might find that the item isn't so necessary after all, or that there are, in fact, better options out there. With so much abundance, in other words, you should never need to feel pressured into making a purchase.

The article A Simple Way to Overcome Spending Temptations originally appeared on Fool.com.

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