Why do we spend more than we need to?

There are three things that humans need: food, clothing and shelter.

Then there’s the other stuff, we don't really need it but buy it anyway.

Much of this spending is down to ingrained human psychology, something which marketers have long used to part us from our cash, says Ekant Veer.

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“Whenever we're looking at something to buy, even if we can actually afford it, we should be thinking, what am I really getting from this and what is it really worth to me,” Veer, a professor of marketing at the University of Canterbury told RNZ podcast Thrift.

Veer is also a consumer behaviourist and says much of our spending is underpinned by society more broadly.

“Success is shown through consumption, and that it is good to spend.”

When times are tight, we might try to focus more on the difference between our wants and needs, but marketers will try and blur those lines, he says.

“How much of our spending is linked to keeping us alive and maybe even thriving, and how much is linked to our identity and who we are trying to strive to become, and that's the stuff that marketers really love.”

How we present ourselves publicly, and our tendency to want to present a positive image is another trait marketers love, Veer says.

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“What is the portrayal of myself when I step out? What are the things that I need to do in order to feel like I'm contributing to society or I'm successful in society?”

The mood we are in when we shop is also something we should be mindful of, he says. Don't go shopping when you're tired, busy, stressed or angry because we’ll naturally want to reward ourselves.

“Marketers in particular have taught us that the best way to reward yourself is by the accumulation of stuff.”

Back in 1979 two psychologists, Daniel Kahneman and Amos Tversky, proved that we are more worried about losing something we have, than gaining something we don’t. Veer says this is a trait marketers understand well.

“They won the Nobel Prize for economics around Prospect Theory, by just demonstrating that humans are more likely to avoid loss than they are to be attracted to gain.”

If we're not thinking mindfully about every purchase, we will do what we can to avoid loss, he says: “I'm really missing out if I don't get that.”

Another behavioural theory we're up against is called present bias, he explains, where we would rather have something now, even something small, than wait for a larger reward.

Veer recommends some tangible way of watching that investment grow - even an old-school jar.

“Putting that cash into a jar, something physical that you can see becomes really rewarding because you see that thing grow.”

The way to combat these tendencies is to be mindful every time we consider taking out the purse, he says.

The pain of payment, he reckons, is a good defense against impulsivity.

"We've learned that we don't like losing things, but we really hate losing money

“It's part of the reason we're so attached to our credit cards, because we never see the money leave our pocket.”

So, stick with cash, he says.

“Physically handing over cash and having to carry the change and knowing that's all I've got left, that increases the pain of payment. And so, when that happens, we become significantly more mindful about how we go about our spending.”

Another tool in the battle to save money is to keep a diary, Veer says.

“Even if you feel like I'm a horrible human being for desperately wanting to buy that new dress or that new suit, because I'm just trying to show off to someone else, write it down.”

And then, he says, unpack the reasons for those feelings.

“Where's that come from? And how important is that thing?”

If you're looking at buying something, think about how it fits with your private or public self and who you want to be.

Check your mood, are you angry, stressed or sad and is that affecting your decision?

Keep a diary.

Be aware that we really don't like to lose things or miss out. So, look at how products are marketed or worded to tempt us, and then turn that idea on its head.

Use cash and the pain of payment principle to spend less.