Pause Points

Pause Points icon

Welcome to Pause Points. It’s all about that moment that you decide to buy and how to make conscious spending decisions. To do this it helps to understand the factors that influence your spending decisions. This topic is not just about your attitudes and values; it’s also about increasing your awareness of external influences like marketing strategies.

You can think about:

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Why do I buy?

Your spending decisions are personal, based on your wants and needs.

Everyone has different spending habits, and responds to different influences, so you will have different ways of managing your habits.

Understanding the reasons for your spending choices and what motivates you, gives you greater ability to make conscious financial decisions.

What do you think could be influencing your spending decisions, consciously or unconsciously?

Watch out for these ways that advertisers have adapted to social media and are using data about your online activity to encourage you to buy:

  • Social sites such as Instagram and Facebook are platforms for advertising campaigns. Have you noticed that the ads on Facebook are strongly linked to your recent online searches or purchases?
  • Sponsored ads directly target individuals who are most likely to have an interest in the content but they can easily catch anyone’s attention and often register at an unconscious level.
  • Advertisers are getting consumers to spread the word about their products through the use of social media, such as viral hash tags, posts on Facebook and other platforms such as Snapchat, Instagram, etc
  • Advertisers also use social media influencers to promote products as they have high levels of reach and are respected by their followers.
  • Advertisers pay web search engines for their product to be ranked at the top or alongside search engine results.
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Did You Know?

“Beware items displayed in threes – stores know that relatively few customers are going to buy the really expensive laptop for example, but it makes the next most expensive one seem “mid-priced” swaying you from the cheaper one that you went in for”.

Source: Claudia Hammond (2016) Mind Over Money: The Psychology of Money and How to Use it Better, Canongate Books, UK, 2016

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The psychology of spending

  • Do your emotions influence your spending? How?
  • How do you feel after you have bought something you love?
  • What might be some of the external influences that affect you?
  • Are you a cautious shopper, who takes time to compare products?
  • Do “deals” encourage you to impulse buy?
  • Do you stick with the same provider of mobile phone plans, energy or financial product or keep an eye out for a better deal?
  • Are you paying for an extra product feature that you don’t need/want as part of a package? Have you investigated the alternatives?
  • If you have already spent several hours shopping for something without success what are you most likely to do? Go home and try again another time? Buy something that isn’t exactly right?
  • Have you ever experienced remorse after making a purchase? What did you do?
  • Do you wait for a sale before you make large purchases?
  • Do you spend more time researching different types of products? For example, do you spend more time comparing 5 cents difference in petrol prices than you spend on getting the best deal on holiday accommodation?

Do any of these thought prompts strike a chord with you? Do you think of yourself as a conscious consumer? Are there things about your behaviour that you would like to change?

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Have you considered alternatives?

Perhaps you can also pause to ask yourself  ‘do I need to buy or is there another way to get what I want?’ The sharing economy helps you to spread the cost of something expensive that will be underutilised by one person. Some alternatives to buying include:

  • Signing up for a car share service
  • Using bicycle rentals
  • Upcycling
  • Joining a library
  • Appliance sharing
  • Sharing sporting gear with friends e.g. ski equipment.
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Creating pause points

Pause points create an opportunity for you to make conscious spending decisions. They allow you to find the balance between impulse buying/instant gratification and long-term satisfaction. Some effective techniques for creating pause points are:

  • Ask yourself 5 questions:
    • Why do I need this?
    • Why is it better than what I already have?
    • Can I borrow it?
    • Can I rent it?
    • Can I wait for it to go on sale?
  • Make a list before you go shopping and stick to it
  • Give yourself a cooling off period:
    • 24 hours before you buy a new piece of clothing or accessory
    • 30 days before you make a large purchase
  • Imagine the value of the purchase to a future you
  • Use a spending diary app like ASICs’ MoneySmart TrackMySPEND

Would these ideas create effective pause points for you?

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How do I make good purchase decisions?

By practicing comparison shopping, that is, finding several providers of the same product and comparing their prices, you can develop an understanding of the ‘value for money’ represented by a particular price.

For all comparison shopping, it is essential to be comparing like with like.

When you are comparing products, you may be interested in more than just the price. The values that are important to you will also influence your spending decisions.

It can be tricky when you are making shared purchases with your family/friends. For example, you and your housemates might want to share the cost of a new washing machine, or you and your family members might share the cost of a tent. Before you head for the shops or look online, it can be a good idea to have a chat about what is important to each of you when you are making spending decisions  and come to an agreement about how you will collectively make your spending decision. Make sure you are all aware of what each of you can afford.

Taking the time to investigate products and services for their alignment with your values and comparing prices before making a purchase can save you money.

Remember to check what is in the box before you leave the store or click on “Pay Now” so that you avoid unpleasant surprises.

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Dive Deeper into comparison websites

There is a range of price comparison websites available online covering makeup, holidays, mobile phones, financial products, etc. Ensure that you have all the information you need so that you are comparing like with like and doing a genuine price comparison.

Some price comparison sites are sponsored and certain products will be pushed to the top of the search results. A reliable and independent site will provide the best information.

Here are some tips to find unbiased information:

  • Beware of comparison sites that compare on price but provide minimal information on product or service features
  • Travel aggregator sites can be compared directly with the airline or the hotel offering the service and you can also look at reviews on sites like Trip Advisor
  • For comparison sites for financial products, look for one that has a broad range of providers and check for impartiality by finding out of there is a relationship between the site owner and the product providers

Some examples of independent and reliable comparison sites are:

  • Choice – an Australian member funded consumer group, which provides independent advice on products and services, from appliances to insurance.
  • Canstar – an independent private Australian compny that provides comparison data across a wide range of financial products and providers

ASIC’s MoneySmart website also provides information on the use of comparison websites: Using comparison websites

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