Have you ever wondered why you walked into a shopping mall for bread and milk, but came out with enough groceries to feed a small village? Or why does that Instagram Ad for a new gadget suddenly make your old one look like it belonged in a museum? It is because there are psychological triggers within us that crave spending. If you read our last blog, we spoke about what drives your spending, in today’s write-up on the psychology of spending, we will unpack the psychology behind our spending habits.
1. Emotional Drivers of Spending: When Your Feelings Control Your Finances
a. Retail Therapy: Had a bad day at work? Or just healing from a breakup? Many of us turn to shopping as a quick fix. At that moment, those new pairs of shoes or the latest novel by Chimamanda might seem like just the perfect antidote to a rough day.
b. FOMO (Fear of Missing Out): When all your friends show up at that party wearing designer brands, or when everyone seems to be taking a trip to Morocco, the fear of being left out can drive you to spend money you don’t have.
c. Status Anxiety: In a society where “packaging” matters, the pressure to keep up appearances can lead to unnecessary spending. From the latest iPhone to a big car, we often buy things not because we need them, but because of what we want others to say about us.
d. Instant Gratification: We’re living in the age of “now now”. Why save for months when you can buy now and pay later? This mentality often leads to impulsive purchases and increasing debts.
2. The Role of Marketing: How They’re Playing Mind Games with Your Money
a. The “Limited Time Offer” Trick: Have you ever noticed how every other day there’s a “flash sale” on Jumia, Konga & Amazon? These create a sense of urgency, making you buy things you don’t need just because you think you’re getting a deal.
b. The Aspirational Lifestyle Sell: Ads don’t just sell products; they sell lifestyles. That cologne ad isn’t just about smelling nice; it’s promising you’ll be as suave as Richard Mofe-Damijo. They just held unto those aspirations in your heart.
c. The “Nigerian” Appeal: Marketers know how to tug at our patriotic heartstrings. From Glo’s “Proudly Nigerian” to GTBank’s “Naija” themed ads, they’re tapping into our national pride to influence our choices.
3. Social Media: The New Peer Pressure
a. The Instagram Effect: Scrolling through endless posts of people “living their best lives” can make you feel like your life (and your possessions) don’t measure up. Suddenly, that trip to Dubai feels like a need, not a want.
b. Influencer Impact: When your favorite Instagram celebrity swears by a product, it’s hard not to want it too. But remember their “honest review” often comes with a hefty paycheck.
c. The Facebook Marketplace Temptation: With deals and discounts constantly popping up on your feed, the temptation to spend is always just a click away. It’s always like they were designed just for you.
4. Cultural Expectations: When Tradition Hits Your Pocket
a. Aso Ebi Syndrome: It’s not just cloth; it’s more like a social obligation in the Nigerian settings. But the truth we forget to see is that the pressure to buy and wear aso ebi for every event can drain your account faster than you’d imagine.
b. Owambe Culture: Our love for celebrations is unmatched, but so is the expectation to spray money or give hefty gifts. It’s like an unwritten social tax on your finances. Sometimes, it won’t hurt a bit to sit at home on a Saturday for the sake of your pockets. Send them online wishes and gifts.
c. Family Responsibilities: In our culture, success often comes with the expectation to support extended family. This ‘black tax’ can blur the lines between needs and wants. That your uncle who has never seen you since childhood happens to have a child who doesn’t have school fees when they hear of your big promotion at work.
d. The “God When” Effect: You see your friends and relatives buying the latest cars, and pieces of jewelry or receiving the best gifts from those around them. Have you ever been here before? Do you think it’s an aspiration or desperation? Your mind may just register it saying “ I will buy my own soon.” But hold on! Have you asked yourself- is this a need or want?
e. Fake It Till You Make It: Have you heard that line by motivational speakers before? The pressure to appear successful can lead to spending on status symbols, even when your bank account can’t handle it.
5. Tech and Trends: The New Age Influencers
a. Fintech Frenzy: With the rise of easy payment apps which removes the stress of queuing in the bank for God knows how long! Spending money has never been easier. It’s like having a shopaholic demon on your phone. You see a cloth or device you like, and the next moment, you have opened your mobile app(This is why you need Bravewood Max- It would teach you how to stay away from the things you don’t need)
b. Cryptocurrency Craze: The allure of quick gains from trending news of crypto success stories, can push people to invest in volatile crypto markets, often blurring the line between smart investing and gambling.
6. The Naira Factor: Economic Realities Shaping Desires
a. Inflation Anxiety: Have you ever been urged to buy something before due to its rising cost due to the Naira wahala? With the value of the Naira often uncertain, there’s a tendency to spend now rather than save for a future where money might be worth less.
b. “Chop Life” Mentality: Economic instability can foster a “live for today” attitude, prioritizing immediate wants over long-term needs. This is popularly described with the phrase “We got only one life to live, enjoy it” or “Allow me to flex. I cannot kill myself”.
Understanding these psychological triggers is like having the cheat codes in the game of personal finance. Next time you feel the urge to splurge, pause and ask yourself:
“Is this a genuine need, or am I being swayed by emotions, clever marketing, or social media FOMO?”
At the end of the day, true financial freedom comes not from having everything you want, but from wanting what you already have. As the popular quote goes, “Cut your coat according to your size” – but first, make sure you actually need that coat! Now that we have learnt about the psychology of spending, the question now becomes,” How can we break the cycle and become mindful spenders?”
Watch out for our next blog post where we unravel this question. Until then, see you around!
Bravewood is licensed by the Central Bank of Nigeria to provide investments with low risk and high returns for Nigerian professionals.