The Psychology Behind Bad Buying Decisions

woman shopping while wearing a mask

In "The Science of Why We Buy Clothes We Never Wear", consumer psychologist Kit Yarrow examines the psychological calculus that takes place when we make purchases we don’t end up ever actually using. Why do some of us keep buying things we don't need (and may not even really want)? It seems needlessly destructive, especially when money is tight, but it isn't a case of simple self-sabotage.

If you’ve got a limited budget, yet you can’t seem to stop undermining yourself with bad purchasing decisions, keep reading. The more you understand about why you make these seemingly terrible decisions, the easier it becomes to steer away and start building better, less destructive habits.

You blind yourself to all the cons

In the moment of decision, when you’re tallying up all the pros and cons of making a purchase, you may suffer from something called choice-support cognitive bias. This is where you ignore all of the perfectly valid reasons why the purchase in question is a bad idea and instead focus only on the pros.

This can be especially pronounced where sales are involved. In fact, that’s a big reason why retailers use discounts as a selling technique – we have a tendency to focus too much on the price reduction and not enough on whether or not the item is something we actually need.

When it comes to items that are on sale, your first thought should be, “Would I buy this at full price?” If the answer is no, then that may be a sign you’re putting too much weight on the sales price. When considering items that aren’t on sale, try to remove the top selling point from the equation – it may be making it hard for you to be objective.

You imagine a reality that will never be

Some purchases don’t pan out because they are entirely aspirational in nature. They reflect a future state that either never comes or was never possible to begin with. In other words, you buy something because you think it will go hand-in-hand with life changes you have yet to make. So while you fail to make those changes, your big ticket purchase just sits there, unused.

Breaking from these kinds of purchases requires that you step back and be honest with yourself. A lot of us treat these purchases as motivation – I’ll buy these pants a size too small so I’ll be motivated to lose weight. Unfortunately, that rarely works out. A much, much better strategy is to leave the reward for after you’ve accomplished your goal. (In this example, you could buy yourself some new pants after you’ve reach your weight loss goal).

Additionally, buying things ahead of accomplishing your goals can actually be demotivating, especially if you’re prone to looking at your purchase and feeling bad about the changes you haven’t made. You may be creating more pressure and not more motivation.

You buy things you like too much to use

Finally, counter-intuitive though it may seem, some people are prone to buying things they like so much they aren’t willing to risk ruining them by actually, you know, using them. It’s those fancy shoes you bought and never found an occasion good enough to warrant wearing them. Or those fancy plates. Or those expensive earrings you’re so afraid of losing.

Sometimes we can revere a purchase too much to actually enjoy it in a meaningful way. So before you finally make that big purchase you’ve been dreaming about, make sure it’s something you won’t be afraid to take out of the box. 

And of course, if you need one-on-one help with your spending, budget counseling is always free and available 24/7. Let us help you figure out where your money is going and create a plan to balance your budget and start making real financial progress.

Article updated August 2020

Tagged in Psychology and money, Smart shopping, Budget tips

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
  • MMI is rated as “Excellent” (4.8/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
  • MMI is a member of the Consumer Federation of America (CFA), an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
  • MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
  • MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.