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There’s probably never been a point in history when it’s been easier to buy stuff.
Any time of day. Surf, shop, click and buy. It’s not just a search for needs and wants that drives some Millennials to fill up the online shopping cart. A desire for connection, a cure for boredom and retail therapy motivates many Millennials to buy online.
Millennials, even more than older generations, turn to their favorite online store for a happiness boost. Nearly half of Millennials (48%) report buying something recently because they were feeling down, upset or angry, a CompareCards.com survey found.
The science behind shopping reveals that buying things gives you an emotional lift. Shopping can prompt our brains to release dopamine, says Jared Heathman, MD a Houston-based psychiatrist. “Dopamine is a neurotransmitter that stimulates the emotion we understand as happiness,” Heathman says.
Blame boredom too.
Three quarters (75%) of Millennials pulled the trigger on an impulse purchase while browsing to pass the time. That could torpedo even the best-intentioned budget.
A quarter (26%) of Millennials bought a non-essential item online they can’t pay off in full at the end of the month, the CompareCards survey found.
Online shopping makes impulse buying easy, says Tyler Landes, CFP® and founder of Tandem Financial Guidance, LLC, a fee-only financial planning firm.
“You can do it on the couch, in your sweatpants, from your phone. Because we can buy with a single click with an app that usually stores our payment info, we don't feel the pain of the transaction. It's easy to get carried away and be surprised later when the bill comes,” Landes says.
To understand how Americans, approach online shopping, CompareCards.com by LendingTree conducted a national survey of 1,000 American adults who report having shopped online more than once a month. The survey was conducted September 21-26, 2017.
- Nearly half (48%) of Millennials recently bought an item online because they were feeling down, upset, or angry, versus 26% of those over 35. Over half of those emotional purchases were over $100.
- In last month, 26% of Millennials reported buying a non-essential item online that they can’t pay for in full that month.
- Three quarters (75%) of Millennials made an impulse purchase online while browsing to pass the time versus 56% of those over 35.
- Emailed coupons inspire purchases: 66% of Millennials bought something online prompted by a coupon, versus 42% of those over 35.
- Free shipping entices additional purchases: 81% of those under 35 added items to their online shopping cart to get free shipping.
When someone is depressed or upset, online shopping can create a false sense of accomplishment and connection, says Dr. Natalie Feinblatt, a licensed clinical psychologist in Los Angeles. “Purchases make you feel like you are doing something, and like you are ‘interacting’ with the store,” Feinblatt says.
Millennials are more susceptible to emotional buying than Baby Boomers. In the last three months, 48% of Millennials admitted to emotional buying compared to only 11% of people who were 65 or older.
Buyer’s remorse could set in once the bill arrives. In last month, 26% of Millennials reported buying a non-essential item online that they can’t pay for in full that month. Those interest charges add up fast.
How can Millennials counteract this impulse? “Put several steps between you, your shopping cart, and your wallet,” says Dr. Erika Martinez, a licensed psychologist in Miami. She offers several tips to battle against budget-busting retail therapy purchases:
1. Remove stored payment information from online shopping sites you frequent. “This way you have more time to re-evaluate your purchases as you walk to get your wallet.”
2. Register a gift card on your favorite e-commerce sites with a specific amount of money. “When that amount is gone, you're done shopping.”
3. Budget a pre-set spending limit per gift.
4. Unsubscribe from all daily retailers' emails.
The urge to browse online to the pass the time may stem from a different part of your brain, but the budget consequences can be the same.
Boredom is the enemy of a budget, says Dr. Heathman. “Boredom constantly seeks gratification, and purchasing a new ‘thing’ is an easy way to stimulate the brain. A healthy, cheap hobby is a more cost-effective solution.”
Digital marketing means your desires follow you across your devices.
“Ever google something for five seconds only to see that item pop up everywhere online for the rest of the week? Marketers are super savvy at reaching a focused slice of interested consumer. This means we're blasted with ‘relevant’ marketing all day long, which can lead to impulse buying decisions. It's like being a kid in the candy store 24/7,” Tandem Financial’s Landes says.
Indeed, over the past three months, 68% of Millennials admitted to browsing shopping sites online three or more times to pass the time without a specific item they wanted to buy. That resulted in a purchase by Millennials a full 75% of the time, versus 56% of those over 35.
Baby Boomers showed more restraint. The number of unplanned purchases decreased by age with only 38% of people aged 65 and older buying after browsing to pass the time.
Don’t let boredom browsing torpedo your budget
- Set time limits. “If you need to sit down and start surfing the web, play around on social media, or look for an item, try setting a timer. Allow this behavior for a limited time. Make the alarm obnoxious and set it nearby but out of reach so that you must move. This will help to break that level of concentration,” says Todd Schmenk, a mental health counselor at Aqal Therapies Inc.
- Recognize boredom. “Do something that will add meaning to your life. Call an old friend or family member, pull out that book you have been meaning to read, get up and go to the gym. In the end these actions will have more meaning and longer lasting value than any trinket will have,” Schmenk says.
Coupons and free shipping thresholds lure Millennials to spend more
Sixty six percent of Millennials bought something prompted by a coupon, versus 42% of those over 35.
To get free shipping, 81% of those under 35 added items to their shopping cart.
- The hassle of online return meant 60% of Millennials kept an item, versus 42% of those over 35.
Remember that online shopping is real shopping and should be tracked in your budget just like groceries, Landes says.
- Create categories that matter to you. “Don't waste time having a toothpaste budget, instead get detailed where it matters. If you tend to spend a lot on shoes, spend a few months tracking those expenses. Shining a light on problem areas can help you to change your spending behavior,” Landes says.
- Add a miscellaneous category. “In budgeting, every dollar should be accounted for. It's appropriate to have a ‘catch-all’ category to ensure dollars don't slip through the cracks,” Landes says.
Millennials need to save for the future
When you are in your 20s or early 30s, retirement seems like a distant concept. But, that is the best time to start saving.
“I've heard Millennials say things like, ‘I don't plan to retire. I'm taking mini-retirements now.’ It's important to have positive experiences and enjoy your life in the present - but to say you'll feel the same way at 85 as you do at 25 is sheer nonsense. So yes, savor the good times, but also stash away some money for the future. The magic of compounding is in your favor - don't miss out on that!” says Kate Stalter, president at Better Money Decisions, a fee-only registered investment advisor firm.
“If you can salt away 10% of your paycheck now, your future self will thank you. If you can't manage to save 10% right away, start with 3% or 5% - the important thing is to start,” Stalter says.
How people shop online may depend on age
While shopping online, the CompareCards survey found the majority (74%) of people shop on a computer (laptop or desktop). That compares to 18% who purchase on a phone and 9% on a tablet.
Buying on a phone decreases as one gets older. Phone purchases top out at 34% for 18-24 year olds and slide lower as age, bottoming out at 5% for people 65+.