Are You Self-Conscious of Your Financial Decisions?

Are You Self-Conscious of Your Financial Decisions?

By: Eric Johnson

It’s late at night, and you are scrolling through one of your social media apps. Suddenly, you see an advertisement for a product on your mobile device, and you feel tempted to make a purchase. At first glance, you think, “I don’t need this!” Then, as time passes, you click on the advertisement and are now on the advertised product’s website. A shiny discount alert appears, and your temptation to purchase magnifies further. Suddenly, without any second thoughts, you add the product to the online shopping cart, import your credit card information into the billing field, and click submit. Are you happy with your purchase?

According to a study by Bankrate, nearly half of social media users in July 2022 made an impulse purchase of a product on a social media platform they use. 64% of those users later said they wished they did not make those purchases. As you can see, impulse buying is incredibly powerful when we are scrolling through social media on our couches. To many people, impulse buys are when you check out at a convenience store and see a discounted candy bar or product that’s cheap enough to make you want to purchase it. Social media makes impulse purchases even more tempting as it only takes one or two taps to make the purchase.

Credit card purchases are equally troublesome. Unlike a debit card, you can often spend more than you currently have in the bank with a credit card. You think to yourself at checkout, “I’ll just pay the balance off in a few weeks!” A few weeks pass, and your credit card balance grows more significant from new purchases. Suddenly, without warning, you have a ballooning credit card balance that makes it nearly impossible to pay off the debt.

As you can see from the two examples above, our behavior plays a role in our financial decisions. Impulse purchases or ill-thought credit card purchases can make you worse off. Understanding our emotions will help negate poor financial decisions. Psychology significantly influences our views on money, savings, and consumption. All our brains react differently to situations. That is a natural part of life. However, we all can take control of our lives and limit the damage negative behavior may have on financial affairs.

To become self-aware of your financial decisions, observe your impulse behavior decisions. Do you make impulse purchases when you are upset or sad? If so, channeling your emotions into a better avenue than consumerism may be best. Does your credit card balance continue to grow larger each month? Maybe it’s time to reduce consumption and put some of your income and savings toward your credit card balance. There are many ways to gauge your behavior to determine if your emotions are wreaking havoc on your financial affairs. You need to note what issues you are experiencing and take corrective action.

We are all imperfect with our financial decisions. Trust me; I have made plenty of ill-conceived financial choices. What is essential, though, is to learn from your mistakes and use those moments as a teaching opportunity. Remaining self-conscious about your financial decisions will help you when developing a financial plan.

Mr. Johnson is the Director of Financial Aid and an adjunct faculty member at Goldey-Beacom College.