Why aren't women in the U.S. better at saving and managing their money? I've heard all the excuses: "I don't have time ... I'm too disorganized ... I don't do numbers ... My husband does that." As I discuss at length in my new book, Make Money, Not Excuses (Crown Business), I'm convinced that the real reason is a thought process that goes something like this: "I don't have anything to wear! I'm going to buy that dress, that skirt, that bag, those shoes!"
Research suggests that 2% to 5% of the U.S. population--women and men equally, according to a recent study--are compulsive buyers. These people are special cases; they have a psychological disorder and need treatment. But a significant percentage of American women--12% to 15% by some estimates--are what Nancy Ridgway at the University of Richmond calls excessive buyers. They shop not out of need but out of a desire to make themselves feel better, to give themselves a pick-me-up.
It's my hypothesis that an even greater share of American women are what might be called periodic excessive buyers. They buy things they later regret. It's hugely helpful to be able to recognize one of those meaningless purchases before you make it. Here are some tips.
Pause. Sometimes in a shopping frenzy you'll be operating at high speed. You grab some clothes, try them on (or not), maneuver your way to the shortest line at checkout. The quicker you get it done, the quicker you can pretend it didn't happen. So pause. Take a deep breath. Ask the opinion of the person in the next dressing room. Go to the bathroom if you can't think of anything else. What you're really doing is putting a little space between yourself and this purchase.
Interrogate yourself. New York City psychologist April Lane Benson, who edited I Shop, Therefore I Am, suggests asking yourself six questions before you buy anything. Questions like How am I feeling? What happens if I buy this? What happens if I don't? The answers may be enough to get you to think twice. If you don't know why you're in the store, if you're feeling down or angry, if buying this will make you cranky when you get the bill in the mail, you'll find it easier, Benson says, to walk away.
Dream. Consider what you could do with the $89 it would cost to buy those pants. (And the shoes you're likely to buy two weeks from now.) If you can avoid an $89 splurge every two weeks for the foreseeable future and you put the money (tax deferred) in the market where it earns an 8% return, your financial future would look an awful lot brighter. At 8%, those $89 investments will have grown after 20 years to $150,284.
Hold (or Return). If you make your way to the cash register and your willpower hasn't kicked in, you still have two options. First, put the item on hold for 24 hours. Even if your weakness is online shopping, you can often leave an item in your cart for a day or two. If you no longer feel compelled to buy it a day later, don't go back to the store or the site. And if you do buy it--and realize you really don't need it--you can always send it back.
SOURCES: U.S. CENSUS; BUREAU OF LABOR STATISTICS