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T.E.A.M. Tuesday Articles 

It's Okay to Pass on Deal$

By Justin Simmons - Sep 26, 2023

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Waiting in the checkout line of any retail establishment, there is no telling what you might find on the remaining few feet of shelving just moments away from your final purchase. To think, having made it this far and almost missing the best bargains of the day. Luckily the store management has your best interests in mind and strategically positions the deals where you’ll be sure to find them.

Twenty, thirty, or even fifty percent off some of the items surrounding us conveniently at the time of payment. With wallet in hand, we would be remiss if we didn’t add at least a couple of these items to our cart. Minutes later we exit the establishment with head held high, feeling exceedingly accomplished. The rush of retail therapy has done its job and chances are we’ll be back again. As for the deals, they’ll be waiting (or at least we hope).

If this sounds familiar, it's not by coincidence. The entire psychology around the way we make any purchase has been designed to ignite our neurological pathways in dramatic fashion. For those who prefer online shopping over brick-and-mortar, don’t worry, you’re not being left out. Digital shopping offers even more targeted campaigns via pop-ups, emails, and discount codes upon checkout. No matter where we choose to spend our money, we can rest assured someone will be quick to offer us new ways to spend even more of it.

Lifestyle inflation is a part of economics we don’t typically hear talked about. As we earn more money, our spending habits often increase and thus impede our ability to improve on building wealth. In the race to earn more, it may be assumed people will learn to save their additional income. Unfortunately, there are many more outlets informing us on where to spend versus how to save our newfound earnings.  

Managing a personal budget may prove to be one of the most challenging requirements throughout our lives. Between dynamic market swings, rollercoaster inflation, employment unknowns and unsolicited advice, it’s no wonder why there is such a lack of confidence around financial affairs. Like any industry, where there is uncertainty, there will be an opportunity and where this is opportunity, adversity is likely to follow.

The goal is to remain opportunistic but not impatient. Rushing into purchases or buying into gimmicks doesn’t allow for proper due diligence. No matter what size the investment, economics plays its part and pricing more often than not will represent a fair market value. When things seem too good to be true, there is most likely a reason for it. A trained mind will be able to separate the emotion from the logic in search of the full story.

The term ‘investment’ will always hold weight as people recognize the importance of ensuring future value. There are, however, plenty of investments not worthy of our capital. Many investment avenues sell a grand vision of return when in actuality they may never perform as advertised. This is yet another reason we must be our most trusted advisor for financial decisions and learn ways to protect ourselves in this arena.

Scams and fraud claimed over eight billion dollars of American funds in 2022. These financial snake pits are set to trap unsuspecting consumers in a variety of ways throughout all industries. There is a silver lining however, there are many resources and institutions established to insure against these mishaps. Educating ourselves on who we buy, bank, and invest with is critical. We don’t need to be an expert in the field of finance but we do need to find reputable people we can trust. Seeking guidance is empowering and also helps us slow our process to avoid firing from the hip.

Financial goals and responsibilities are ever present on our list of top-tier priorities. With such pressure to maintain an individual economic balance and improve profits, it's easy to fall prey to tactics of scams, impulse buys, or over-leveraging debt. Before we make any financial decisions, one of the most important facts to recognize is that it's okay not to take advantage of every deal we’re presented.

Passing on deals isn’t a missed opportunity, it’s a strategy. Even if you have an abundance of wealth to spend on everything you desire, there will always be market conditions and new opportunities that sway decisions. In retail, new styles emerge rendering others outdated. In real estate, some locations increase or decrease at different rates based on unforeseen circumstances in the local community. Anywhere money is spent, there is an opportunity to hold off on the purchase for a potentially greater investment elsewhere. Choosing where to spend wisely is revered as savvy financial management. This is why it always surprises me when people get so excited to boast the opposite.

Celebrating depreciating assets has become a trend in our modern society with so much attention focused on media platform views and acceptance. Efforts to showcase solid bargaining or minimize depreciation have been replaced with the loud representation of lavish spending habits and overpriced endeavors.

The art of intelligent commerce includes finding ways to buy low, sell high, and maximize discounts, especially when dealing with larger volumes. It would be nice to see these lessons displayed more on social media platforms but by popular demand, the audience appears to applaud for less tactical business practice.

Apparently, every day should be Christmas or vacation by posting and boasting standards. The way society has deemed success through pictorial form almost insinuates working for a living is for the weak and therefore signs of financial struggle or budget acumen are ill-advised for getting ‘likes’.

Gaining attention through public approval can have a deafening effect on our judgment. As humans, we all want approval and acceptance by others. For those with low self-esteem, this want can become an addiction virtually overnight. The satisfaction felt by a warm response to a media post creates just the reassurance needed to feed this addiction. As discussed in last week’s article Temptation and Fantasy Can Provide Purpose, the release of dopamine hormones in our brain upon ideas or thoughts that make us happy will fuel our desire for these feel-good sensations. Getting likes on social media might seem innocent enough but the rush it provides is highly potent.

This same rush is achieved when we impulse shop, gamble, or even invest in a financial portfolio. The power of the purchase can cloud our judgment and set us back finically. Our brain puts a large emphasis on happiness as it is one of the driving forces to motivate our actions. We crave this feeling so much, we're willing to substitute happiness but once we do this it’s hard for the brain to differentiate between what's real or just a filler. 

By design, the following equation is meant to establish mental motivation: The Prospect of Happiness = Motivation to Drive Action. For many people, money can provide the illusion of happiness, so our mind is capable of substituting this equation: The Prospect of Money = Motivation to Drive Action. Taking this concept a step further, money is also interchangeable with ‘things’. So in the example of shopping, the equation becomes: The Prospect of Items Purchased = Motivation to Drive Action.  Naturally, this poses a challenge in the way our brain is capable of managing financial matters and often leads to an emotional response. Regardless of the driver, these emotions will prove temporary and require new prospects to replicate these feelings.

‘Retail therapy’ in essence is a fleeting gratification that dissipates almost as quickly as it began. Sparked by psychological factors such as emotion, cognitive biases, and social influence, we often indulge in this practice even when we may need nothing at all. Commonly leading the list for the top five most common impulse buys are groceries, clothing, household goods, coffee/takeout, and shoes. Smaller items typically associated with food and image dominate the charts, textbook gratification grabbers. This is why we find so many sales in these categories, marketers know we have an itchy trigger finger when it comes to these types of purchases. Perhaps we need more marketing campaigns based on the phrase “A penny saved is a penny earned”.

Long-term investments and large purchases hold more weight, keeping them off the list of top impulses but these areas of spending are far from safe. Over time, the gravity possessed by even large ticket items will diminish. Diversifying a portfolio is a completely valid financial strategy that I myself practice but it also provides a fancy justification to accept a bit more risk. The ability to mix and match any purchase adds a layer of intrigue and variety. Why stop at one investment type when there are so many options to pursue? No one wants to miss an opportunity to strike the next big deal.

Home buying is a relatable point of reference for this discussion. Whether purchasing as a primary residence or an investment property, even the most free-spirited spenders will typically tighten their belts and focus on the details when it comes to such a large purchase. Due to this vantage point on the market, we always hope to find a hidden gem. Something that just didn’t get many views or doesn’t show as well as it could and if really lucky, a seller who wants out with a willingness to consider any offer. Any of these scenarios could render a property ‘a deal’. This is exactly the situation where we need to show maximum restraint and not allow the dopamine to oversell us on the opportunity. Proper due diligence with the consulting of a qualified realtor, home inspector, and closing attorney will improve our practice in these decisions. However, even with a clean bill of health and a green light from the advisors, you have to decide if this deal is right for you.

Timing is everything but we must demonstrate patience to be respectful of the necessary timeline required for our goals to mature. After expending efforts and excitement towards any purchase, it’s hard to pass on the opportunity, especially when convinced we’re getting a great value.

While assessing your financial status, remember the world was made through deals but built by hard work. Working hard will open doors and plenty more opportunities. Some of the best lessons learned are accomplished by watching situations play out and evaluating how you can improve the process for yourself in the future. Try to avoid getting hung up on any one particular offer as those are the negotiations you stand to lose. If you have the capital to make a quick purchase, that same capital will be available for the next opportunity if this one doesn’t work out. Remaining open-minded will allow for a broader view of options to present themselves. New and exciting investments are waiting to be exposed, stay focused on the hunt and the deals will appear once you’re in the right position. Are you ready to discover the power of your mindset?

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