Spending money wisely takes more than a budget and a stack of coupons. It takes some self-knowledge. A good article on Oprah.com highlighted several ways to keep our emotions from trashing our finances. For example, researchers have found that when we run up big tabs on a single trip to a single store, which can easily happen at mass merchandise stores like Target or Wal-Mart, that can lead to added, unnecessary spending. George Loewenstein, professor of economics and psychology at Carnegie Mellon University, said, “You hit the what-the-heck effect: You’ve spent $200; what’s another $20 for a T-shirt?” He recommends spreading purchases among several stores.
Also, try to avoid shopping when you’re in a bad mood or feeling sad. One researcher noted that sadness tends to devalue one’s sense of self. Overspending can be an unconscious effort to elevate your own worth.
On the top of my nightstand book stack right now is Predictably Irrational, an eye-opening look at the many ways our behavior often defies logic and the equally many ways marketers use our irrationality to their advantage.