In his new book, Shiny Objects: Why We Spend Money We Don't Have in Search of Happiness We Can't Buy, Baylor University marketing professor James A. Roberts explores why consumers overspend and how they can curb the habit. Just in time for Black Friday and the start of the holiday shopping season, U.S. News asked Roberts for tips on responsible spending, handling frugal fatigue, and more. Excerpts:
What inspired you to write Shiny Objects?
My whole life has been kind of focused toward the responsible use of money. There were five us in the family and we were given a roof over our head and plenty of food to eat. But we were responsible for everything else we wanted, spending money, car money, all that. After I graduated from college, I was a stockbroker and worked in a banks' consumer loan division. That's where I got an eye-opener as to people's irresponsible uses of money back in the early '80s.
Later, I decided to get a PhD in marketing, and focus my research and interest in consumer behavior. About 15 years ago, I started studying compulsive buying, and then materialism, and then credit card abuse, and now I'm into self-control as well. I've been studying and trying to figure out why we spend more money than we can afford. Why do we believe that money and possessions can bring us happiness?
Why is now the time for a book like this? Do you think flash-sale sites and daily deals have contributed to this "shiny objects" concept?
It certainly makes it easier. And we can even go back further to the advent of the Internet, and easy loan payments, credit cards. It's not that that created consumer monsters in us, but it certainly accelerated the process with easy transactions with credit cards, and now with the 24/7, 365-day-a-year Internet. We've had spending problems and recessions because of spending problems long before the Internet. So that's nothing particularly new, but the Internet, and all these newfangled ways that we can buy things has really sped along the process.
[See Why I'm Shunning Groupon.]
Nowadays people are talking about frugal fatigue. They saved, they've done without, and now they want to splurge again. Is this a real phenomenon?
What we've found is, and this recession is no exception, is what's happened is we hear bad things, and we hear about people losing their jobs, and we pull back [our spending]. But every time there's a light at the end of the tunnel, we see some sunshine on the horizon, we go back to our profligate ways. If you look at every recession we've had since the Great Depression, people have said, "Enough is enough, I've suffered, I've gone without, now it's time to pay back. I deserve better than this," and then we up our spending. Oftentimes, we spend more money after the recession than we did before the recession.
Is frugal fatigue inevitable? How can consumers avoid this pattern?
It is not inevitable, but it's very difficult when everyone else is following the Pied Piper of spending. In the first majority of the book, I try to convince people that money and possessions will not bring you happiness. And once we have an attitude change, then we can go about changing our behavior. If I have to drag you to begrudgingly watch what you spend, and you try to get away with something every time your spouse isn't looking, it's just not going to work. That attitude has got to change before you see consistent behavioral change.
What if other people in your life aren't committed to those same financial goals? How can readers change their behavior when they're being pressured to spend?
There's a tip I like that's called a social contract. It's really nothing more than you and your spouse sitting down and trying to come to some kind of agreement on your financial goals. What kind of spending can we afford? But really more important before we can talk about what we can afford is what do we really want to do, why are we working? What can this money be used for? When people sit down and think about it, it's not so they can buy nice shoes and handbags, and drive big cars and live in fancy houses, it's really for financial security.
Americans in general are very hardworking people, but we've just become kind of lax at how we spend the money. And so, a social contract is merely something where you say, "This is how much we're going to spend on fun stuff, but this is how much we plan to save each month." What I think is the fun part about these contracts is the penalties if we don't follow the contract. That could be house chores. It could be giving up something that you enjoy. It could be giving a donation to a cause that you don't support. When it's in writing, it's much more real.
As we get ready for the holidays, what are some tips on keeping your holiday spending in check?
There used to be something called Christmas Clubs where people would figure out how much money they're going to need for Christmas, everything from presents to the meal. And they would divide that by 12, and put that away a little each month for next Christmas. And they wouldn't get much interest by the banks, but the banks would penalize them for taking the money out. And then in November, they'd draw that money out. Think about how much less stressful and anxiety-provoking Christmas would be when you have all the money already saved up!
The other Christmas shopping advice is just to sleep on it. I call it a 24-hour, cooling-off period. Salespeople know that a vast majority of people who leave the showroom will not come back. And so we know that. If we can use the 24-hour, cooling-off period to our advantage as consumers, we're just going to be that much better off because we have time to reflect. Some of these low-tech solutions to overspending are really some of the best.
It sounds like you're not a big fan of Black Friday or Cyber Monday?
The thing about Black Friday is that sales just get us fired up. And when we get fired up, our brains start creating or releasing dopamine and serotonin--these neurotransmitters chemicals that get us excited, and we make bad decisions. So if you can avoid that kind of party atmosphere, that pandemonium that goes along with shopping, you'll be better off. You'll be even better shopping on the Internet. You're going to be probably by yourself, you'll probably be a lot more rational than you would when you're chasing and struggling with other customers at Wal-Mart or wherever you're shopping to get all the bargains they have on Black Friday, and you may be better off just to be at home.