How to beat the chemistry of online overspending

Dopamine is a chemical neurotransmitter that helps control the brain’s reward and pleasure centres. In other words, you feel a rush of dopamine in response to pleasurable activities like say food or shopping.

But the flipside of this chemistry can prove a real financial problem. Say you’ve come home from work after a long and unrewarding day, feeling sluggish and depressed. In this dopamine-deprived state, many people reach for their credit card for some online retail therapy.

Consumer behaviour experts call it a ‘spending trigger’, and only a new set of Callaway golf clubs or a pair of Jimmy Choo pumps will put things right. Ordinarily, a trip to the nearest shopping centre isn’t realistic at 10pm – a fact that online retailers know only too well as they now meet the demand of this new shopping ‘happy hour’.

Online spending numbers are staggering. The NAB Online Retail Sales Index showed that for the year to July 2013, Australians spent around AUD 14 billion on online retail. This level is equivalent to 6.3 per cent of spending with traditional bricks and mortar retailers across the same sectors. Sales are dominated by ‘pureplay’ retailers (online only retailers), who account for 70 per cent of total sales, and dominate sectors including daily deals and media (movies, books and music). ‘Bricks and clicks’ retailers (traditional retailers with an online presence) still lead the way in groceries/liquor, homewares/appliances and games/toys.

To combat the temptation to overspend online, put a barrier between you and whatever you tend to overbuy. For instance, try noting things you want but wait until later to see if you really need them. If you log on for a Web-only sample sale and find your favourite item is already sold out, tell yourself, “try again tomorrow,” and log-off. It’s also important to not keep your credit card on file by opting to enter your payment information each time. Delete cookies in your browser’s preferences from time to time to deny retailers information to coax you into purchasing their ‘recommendations’. In short, don’t let dopamine turn you into an online shopping dope!

If overspending online is becoming a serious issue, your financial adviser can help you with budgeting strategies to get your finances back on track.

“This document or website contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making an investment decision. Charter Financial Planning Limited and its authorised representatives do not accept any liability for any errors or omissions of information supplied in this document except for liability under statute which cannot be excluded.”

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