Knee jerk spending is when you buy something you didn’t intend to buy when you got up that morning.
Usually, the item you end up buying is some sort of novelty gadget, gizmo, toy, item of jewelry or clothing… but it can extend to a new car or even a new house with some people!
Although there’s nothing wrong with buying these things, it’s the fact that you didn’t intend to buy them when you woke up that’s bleeding you dry.
Amazingly, this type of spending very quickly becomes unconscious! What I mean by that is you completely forget or blank out the memory from walking in the shop (Or whatever) and selecting the item, to paying for it. In most cases, people can’t even remember how much the item was! They almost certainly cannot remember how much they’ve spent that day…because that’s the painful part!
The danger with knee jerk spending is that it’s not you who selects the product. It is the product that selects YOU!
In other words, you’re a puppet. A puppet whose dance involves smiling a lot, nodding your head and removing dollar bills from your pocket!
You don’t wanna be a puppet do you?
Oh… my… God!
I have a question for you. Do you always pay your credit card off every month? I’m going to be presumptuous as hell here. You don’t pay it all off do you? No.
This is how the credit card companies make £billions upon £billions every year (Maybe more!).
They know that people always think, I know, I’ll get it now and pay it off in 30 or 40 days time when the statement comes!
It’s a choice that you weigh up at the time. A choice that seems like a rational one.
But when the statement comes, you have another completely different choice to make. Do I pay it all or do I pay the minimum?
The correct choice for the long term (and you know it!) is to pay it off in full. But after 30 days it turns out you need more money than you first thought and so you choose to pay just a little bit this month and the rest in a month’s time.
But next month you make the same choice… and the next month… and the next… until you’re paying it off forever and a day. With interest that could pay a King’s ransom!
Oh how clever the credit card concept is. I hope Mr and Mrs Amex sleep well at night!
The trick is to leave the purchase for a while and think about it (No matter what the salesman says). Think about how it will help you in life. Weigh up the pros and cons. Then, if you still think you really need the item, go buy it! If you don’t really need it then forget all about it…
Ron Ruhle is a CEO for a publishing company based in Oxford UK called Decapo Publishing. He writes and produces information and training courses for the home business market. He also works as an Consultant for a number of Print Management and Publishing companies. Previously a Major Account Manager for a Government Agency in the communications sector Ron has steered many companies towards the understanding of Mass Comuunications.