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Estimated reading time
8 minIn this article
- Learn what buyer’s remorse is
- The best ways to avoid it
- How to keep track of your budget
You’ve heard of retail therapy - the glorious act of shuttling shiny new things through checkouts and shopping carts to brighten your day.
But spending your hard-earned money isn’t always a mood-booster. It might feel good at the time, but what happens when you buy something and end up feeling bad about it?
That’s buyer’s remorse, and it usually happens when you buy something you don’t need (or can’t really afford).
We get it, FOMO is real. But avoiding it can go a long way towards improving your financial wellbeing. We’re here to fill you in on everything you need to know about buyer’s remorse - including the science behind it, and how to stop it in its tracks.
What is buyer’s remorse?
Lots of research1 has gone into that feeling of post-purchase dread. It’s even got a fancy name: cognitive dissonance, or the feeling of psychological unease that happens when you’re at odds with your own values, thoughts or feelings.
Your spending habits can trigger cognitive dissonance when you think you’re making a good purchase, but end up mulling over all the alternatives and ‘what could have been’ after the fact. You may be left feeling dissatisfied if the product or service you bought:
- Doesn’t meet your expectations.
- Had misleading marketing copy.
- Had a better (and most likely cheaper) offer or alternative elsewhere.
On top of that, three main factors affect how deep your regrets run:
- Effort: How many resources - like time and money - you invest in a purchase decision.
- Responsibility: Having no one else to blame for those wayward buys (except maybe a marketer who hooked you in).
- Commitment: The fact that you’re going to have to live with this new-found, possibly not-as-cool-as-you-thought item, for a long time.
You’d think that putting more effort into making an informed decision would make you feel better about your purchase. Well, not always. The stress of buyer’s remorse is even worse with larger purchases, like homes, cars, or a new TV. Even if they’re things you need! Why?
Well, research shows your level of involvement in a purchase can amplify your anxiety levels.
So, the more you think about or debate a purchase, the harder your buyer’s remorse can be overcome.
How other behavioural sciences affect buyer’s remorse
Another factor that influences buyer's remorse is ‘choice overload’. Ever go the bread section of the supermarket and spend minutes (that probably feel like hours) agonising over all the options? Whites, wholemeal, multigrain, wholemeal multigrain, white sourdough, rye sourdough, dark rye, light rye. You get the idea. This choice overload can often lead to stronger feelings of regret after making a purchase.
Another thought process that happens during buyer’s remorse is ‘choice-supportive bias’ or ‘post-purchase rationalisation’. This is when we convince ourselves that what we bought wasn’t a waste of money. We might overlook any faults or flaws with the product to justify the purchase. So basically, it is buyer’s remorse in a trench coat pretending that you’re happy with the purchase.
With these unavoidable factors, the phenomenon can seem relentless. But like any other form of anxiety, understanding the root cause helps to diminish its control.
How to avoid buyer’s remorse
Did you just spend six months house hunting, visiting dozens of open homes before sealing the deal, and are now feeling wary? Worried you made the wrong choice? Completely normal. It’s not a strike against your ability to make rational investments, it’s just how our brains are wired.
Of course, this isn’t to say that all your purchasing decisions will be correct. Impulse buying is common, and it often stems from a lack of planning. It can also come from feeling stressed in your life or work (or both).
You can use this framework from The Paradox of Choice2 to help make smarter buying decisions:
- Figure out your goals
- Evaluate the importance of each goal
- Pull together the range of options
- Evaluate how likely each is to meet your goal
- Pick the winning option
- Modify your goals
Now let’s put that into practice. Say you need new running shoes...
- First, you figure out your goals - are you running on bush trails, at the track, or on a treadmill?
- Now, evaluate the importance of each goal. Maybe you’d like to do more than one of the above, but you figure mountain running unlikely to happen compared to your treadmill.
- Research all the shoes available
- Gauge how well each meets your hierarchy of goals
- Now you’re ready to pick the shoes you want
And if you do make the wrong choice, don’t beat yourself up. Figure out how you can make a better choice next time.
Because, like those shoes, buyer’s remorse won’t last forever.
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