Through the years that I have lived, I always come back to the idea of the answer which you are looking for is right in front of you. Whatever you may be looking for can be right next to you, but as people are trying to showcase intelligence with the complexity it is difficult to think of the simplest aspects. Psychology has solved many problems by making us “understand” why things work in a certain way.
We have all forgotten to think in our own unique ways as our minds are being evolved by the trends that are controlling today’s society. A good example would be the way that a business would use marketing techniques to attract the customer to purchase a certain brand from the shelf rather than the one next to it. Marketing also goes into a psychological plan by utilising the right price, at the right time, in the right geographical location. We are looking at a scale that must balance, every day that we make decisions we try to put weight right or left on a scale. Based on the outcome may be another decision must be made to re-balance the scale, this may be seen as a type of “exception” for something to replace what is missing, what has been lost or what has not been gained in the plan.
Many different types of behaviours have been analysed however, there could always be a path that is leading to something unseen. This will show the way in which some people may apply the way in which they think to their spending actions as well as negative or deceitful economical saving. As we are looking at economy we must take into consideration a budget, this budget will represent a middle working class citizen with a more or less average salary.
Perception is also very important. We must take into account that most people have different views and the way in which they view life itself can differ very much from person to person. This also proves that point of view which I am presenting in this article and this may not be the only one that has not been analysed in detail. There may be different ways that people are budgeting and spending at the same time. However, we can prove that the majority of the population falls into the 3 categories.
First, we have 50% which refers to the 50% of the population is in poverty, therefore, they can only afford the essentials or the bare minimum to live. Then we are looking at those rich citizens that do not even hesitate to look at the price when purchasing something. Last but not least we have the average family with two kids that have bills at the end of the month, and their savings account which is meant for emergencies or paying the university fees for their children are all spending on a summer vacation. They are able to purchase obscure items or in other words luxuries but with a spending balance in mind. My referral to a spending balance is giving up something that you wanted to purchase in order to purchase something else, or even give up more obscure items or in some extreme cases there are those which will give up some of the essentials in order to purchase luxuries.
The basis can be seen as the link between behaviour and perception as well as the thought. The behaviour that we manifest when making economical decisions tries to result in an efficient outcome. This does not only constitute with economical decisions but everyday decisions. These choices are most of the time personal however, they can be influenced by many different factors. The idea can also be seen as a type of reward system that in a way tricks you into efficiency when actually you are being deficient. In a way, this point can be accessed on reverse psychology.
A way that the mind can perceive of a sum from a forgotten debt that has not been accounted for is as if you won a small lottery. You are not able to meet your wants because you first need to meet your needs. Furthermore, the next step very much prevails on the type of person that you are. The small minority of the population would consider putting this sum in a savings account. As the majority are tempted into spending towards “wants” (desired luxuries). The economy has more and more recent fluctuations which make the population inherit this bad vice of spending more and more as they gain more.
From a psychological point of view, most people see the necessity for some sort of reward from every action made. Making yourself a meal will grant you the pleasure of serving something made by yourself as well as maybe the pleasure of knowing you saved some money from making it yourself rather than having takeout. Doing your homework will grant you free time as well as the sense of achievement and thrive for a goal. This brings me to the job that we do in exchange for financial rewards. Are they really rewards if we require a financial muscle to pay the rent, bills and leaving necessities? What I am trying to portray is that the mindset you use to do things with will not only help you feel more pleased about spending but also raise the efficiency of the work and your performance.
Much research has gone into the way in which the consumers spends and in most cases, we found out that offers, as well as promotions, are what diminishes the efficiency of spending. They once again are hitting on a psychological level by making you think you are essentially getting more and in most cases, you can argue so but we must remember that the mission of every retail business is to get rid of the stock as fast as possible in order to bring more for sale. Can we apply the mindset theory in this case? Most assuredly yes, but to an extent as it depends on the type of consumer as well as the budget that this has available.
A single mother of three children would not dare to look at luxuries but only necessities. A married couple with no children and a good financial position does not look at the price of certain luxuries. There are too many types of consumers so we will compare these two families. The mother has to budget as it is her only hope to afford all the necessities for her children. The couple would be only required if they would desire an expensive luxury such as a sports car or an expensive vacation. This portraits the careens and the carelessness between the spending methods of the two families. It is difficult to generalise as many people find themselves in a financial struggle of some sorts.
This brings me to my next point which is the credit. Most people do not have much of a choice as they desire more and because of the financial position that they are sitting in the only way to gain more is through credit. Now the question to ask here in relevance to this is, does spending on credit affect the way we budget? Knowing that the money you are spending is not yours and will have to be given back to at some point alongside a commission. Time is a big factor in this case as some people desire things then and there. You could wait 2 weeks until you are paid and purchase that new phone that you been dreaming about or you can go on overdraft to get it now. It is just like purchasing something online and paying extra to have it delivered by tomorrow rather than 2 days later. The conclusion comes to the efficiency of spending thrown out the window. However, the extra being paid to get something right now can please the psychological desire of not having to wait.
It is not easy to save a decent sum of money. Many variables can affect this process but the main would be the financial cash flow that your account presents. You need to ask yourself a few questions to determine the “real” need of a certain product. Does your income permit you to purchase something of a higher quality or are you required to drop the quality of certain products? How will the quality of the product affect you apart from a financial point of view? Will the lower quality produce affect your health, state of mind or overall satisfaction?
Today’s society is developing us in such a way that we do not pay attention to the small things of the bigger picture. I am saying this as I do not think that people are reflecting much on the questions asked or in the way that they spend as well as budget.