Why can spending get out of control?-The Diderot effect
We all have experienced a time where one purchase has led to another and then to another! You have a wedding to go to next month, and you have to get a new dress. You find the perfect dress on sale but soon realize that you want shoes to match. And what about earrings and a handbag?
Another example, you purchase a new couch, and your new configuration doesn’t seem to work. To fix this, you buy a new rug, a chair, a lamp. The next thing you know, you have an entirely new living room. It is a chain reaction, and it leads to a path of spiraling consumption.
What is the Diderot effect?
All products purchased by a consumer aims to be cohesive with the consumer’s identity. So when you buy one item, your desire to add to that purchase intensifies. In other words, one purchase fuels your desire to make additional purchases.
By becoming aware of the Diderot effect, you can become more in charge of your purchase decisions by preparing and planning.
What is the origin of the Diderot effect?
“I was the absolute master of my old dressing gown, but I have become a servant to my new one.” Denis Diderot. Denis Diderot (1713-1784) was a French philosopher. He examined philosophical ideas about free will and co-founded the Encyclopédie.
When his daughter was ready to wed, he didn’t have a dowry. When Catherine the Great, the Empress of Russia, heard this, she paid him for his library. After Denis paid for his daughter’s wedding, he bought himself a beautiful scarlet robe. Soon he realized that his robe did not fit in with his other possessions. He replaced his rug, added sculptures, a better table, a leather chair to replace his old straw chair.
You may already have guessed the ending to the Diderot story. He ends up with many things and deeply in debt.
How can I overcome the spiral consumption of the Diderot effect?
Of course, knowledge of financial terms is a great start, but it is not enough. It is possible to spend money without regret and feel confident about our purchase decisions.
How often have you made a purchase, only to doubt yourself if you made the right decision or, worst yet, hoping that you still have enough in my bank account to make it to payday? Putting strategies in place will serve you well.
Here are my top five tips to get you started. The more you implement strategies, the more you will build your knowledge on what works for you. This list is intended to help you get started.
1.Understand why it happens?
When we are shopping, the environment and cues to add to purchases are strong, it is easy to get off track when the path is clear. With one swipe, you can purchase an entire cart before it registers in your brain.
Marketers are experts at drawing our attention. Even online shopping shows the Diderot effect. Before you check out, you see customers often purchase these items together. How often have you added these products to your cart? One punch, and it is done.
On a recent search on Amazon for a wireless keyboard, I selected a keyboard for $36.99. Under the frequently purchased together section, a monitor and laptop stand were suggested add ons.
2. Be Aware
The next time you are shopping, and the thought of additional purchases enters your mind, PAUSE!
Examine the necessity of the item. Think about your level of satisfaction. Often, pausing helps us realize that we don’t like or need the item. I always ask myself, how much do I love it? Ask yourself if the Diderot effect has landed? Pausing gives you time to think about your options regarding spending or passing.
3. Be Prepared- Plan around what you already have or plan for additional associated purchases
Know your home inventory. Before hitting the shops, know what is in your closet and cabinets. Then you can plan to add to what you already have or increase your budget to match the additional purchases.
This is about being intentional, not being restrictive, and reactive. Looking at your money plan, deciding on an amount that you are willing to spend brings joy. Spending more than what you plan is a letdown. The actual dollar amount isn’t the issue.
So let’s examine the dress example. Go to your closet and look at the shoes you have that can go with a new dress. Take a look at your current dresses too. Now that you have that in your mind decide on the probability of needing new shoes. Follow the same process for your jewelry and your handbag. Determine a minimum and maximum amount you are willing to spend by looking at your monthly budget or sinking funds. Once at the store, find your dress first and then decide on any additional add ons within your range of funds for spending.
4. Avoid “retail therapy”.
Spending can be addictive. If a particular mood or event triggers a desire to shop, find other ways to spend time or relieve stress.
I know about myself that when I shop with friends or family, my spending increases. I lose my rational thinking and take their suggestions over the top. Since I know this about myself, I can keep myself in check and slow down before adding items to my cart.
5. Think about Cost Opportunity
Ask yourself what better things can I do with this money. If you spend money on adding items to your purchase, what opportunity are you giving up for your future self?
Consistently remind yourself what you genuinely want to spend your money on and stick to your plan to build your financial success.
A final thought about the Diderot effect?
I love using creative memory techniques when learning new words, concepts, or ideas to recall what I have learned quickly. My creative mind separates the word Diderot into did-’e-rot. Or, in other words, Did He Rot in debt.
When my spending was out of control, and I was in the habit of swiping my card and not paying attention to my purchases, I often asked myself, “where did my money go?” At the end of the month, I’d open up my credit card statement and think, “holy crap, there is no way I spent that much!” So for me, the word “did-’e-rot” stands for yes, you did, and that is “rot” ten!