How to avoid Black Friday overspending

A recent report from the Dreams Scientific Institute, where I am chief scientific officer, found that 1 in 4 people regret the purchases they make on Black Friday. That’s quite a high number! So it’s no wonder that many people will be worried about overspending this year, especially as many retailers will be running alluring discounts.

During a year when so many of us are craving stimulation and excitement after long periods of time spent at home, indoors, and away from friends and colleagues, it will likely feel tempting to buy lots of items. However, there are some steps that all of us can take to assess our purchases this year, ensuring that we aren’t "breaking the bank".

Shopping online has become a really smooth process—even when you can’t afford it. It’s so easy to "buy now and pay later" nowadays. On top of this, online shopping is predicted to significantly increase this year due to lockdown, which could exacerbate the use of such schemes.

Remember: when you "buy now and pay later", you are actually borrowing money. Consumer debt is increasing dramatically, and scientific studies show that consumer debt increases the risk of having negative feelings of stress or anxiety more than other types of debt. This lowers our financial well-being, and our financial well-being is highly correlated with our overall well-being.

It’s best to stick to what we can afford in order to protect both our financial and mental health.

Humans are irrational by nature and our feelings, cognitive biases and mental heuristics will always be involved in our decision making. One thing we can do is accept that our biases and emotions are at play and find ways to work with them to make more financially sound decisions. Use your emotions as a tool rather than as a blocker!

Think about why you want to spend on something, and what is driving your decision. By examining these feelings, you may be able to get to the root of your urge to spend and address your emotions in a way that allows for a balanced approach.

The “why” is crucial. Are you making a practical purchase that is within your means and will make your day-to-day life more manageable? Or, when you think about it, are you simply chasing the excitement of a new purchase, or trying to buy an item that will be fun in the short-term but lacks longevity?

By rationalising what we are doing and how it will benefit our life in the future, we can make sure that we are spending in a way that is sustainable and practical during this time.

If we are fortunate, we may have been saving money this year due to the closures of non-essential shops, cafes and bars. This means some of us may have developed a "fun fund" without really realising, as we have been less able to spend any disposable income we might have on regular activities.

An easy way to assess this is by examining how much you’d normally spend on things like brunch with friends, trips to see relatives or buying rounds at the pub, and starting to put it aside. It really is that simple: by spending less on small luxuries like the occasional pint or a take-away latte, we end up with more in the bank.

It should be noted that it’s always advisable to use "spare" income like this for saving and paying off debt. However, if you do find yourself in a position to spend this money, you could perhaps set aside a special Black Friday budget, by reserving a portion of it for deals. This way, you won’t be overspending—you’ll be using a portion of the money you’ve saved on other expenses, and hopefully putting some aside in your savings, too.

Despite the negative feelings we might feel now, it’s important not to lose hope. Drowning in negative and pessimistic thoughts about the present and the future can easily make us passive and apathetic, or cause us to feel anxiety about our current situation. This could lead to overspending as a way to self-soothe or distract ourselves. 

Right now, we may think that it is not a good idea to open a savings account, start dreaming big about the future or to be thinking about savings when we are clueless about the future of our finances. It will probably feel tempting to just spend money instead. Having those thoughts is fully understandable, but it's also important to think about the time that will come when things calm and we can go back to a somewhat more “normal” life. When restaurants open up and holidays are back on the table, you might find yourself missing the money you spent on your Black Friday purchases!

Take this opportunity to regain control over your finances by saving. Although opening a savings account might not seem as fun or exciting as shopping for Black Friday deals, your future-self is likely to appreciate it: and wouldn’t you rather be having more fun when the world starts again, anyway?

Read more: The ultimate 2020 Christmas gift guide

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