t has been undeniably difficult to make dreams come true in 2020. Transatlantic flights have been halted, sold-out tours and weddings all cancelled and snatched from our diaries.
In March, many felt they had moved beyond the lure of newness - without the need to go out and impress, we didn’t need new clothes, handbags or shoes. But now, months down the line, with so much taken from us, are we filling a void with shopping?
The opportunity to shop online – and to perhaps purchase a consolation dream on next-day delivery – is one of the new things left to do from home (no more sourdough starter). In fact, the e-retailer sector has boomed this year. Research carried out this summer found that two-thirds of consumers have increased their shopping habits because of the coronavirus pandemic.
But in the lead up to Christmas - as advertising pressures us to shop more and more - it’s important to take stock and make sure you’re in control of your online spending, and that it hasn’t taken control of you.
After all, money worries aren’t going away anytime soon. Some 19.4 million Brits are completely unprepared for the oncoming recession, with millennials and Generation Z being the age groups least likely to be ready for an economic downturn, according to new research.
So how can we safeguard ourselves against buying what we don’t need? Here’s everything you need to know to enter the online sales with a mindful head and, hopefully, leave with a healthy bank balance.
How have we become so hooked on online shopping?
“Online shopping is designed to make purchasing as easy as possible, putting very few barriers between you and buying,” Dr Emma Hepburn, a clinical psychologist and author of A Toolkit for Modern Life: 53 Ways To Look After Your Mind, says. “This encourages you to buy impulsively without really having to think about it.”
She points out that the anticipation of buying the item and the “meaning” it will bring to your life sets off your “brain reward systems, which gives you a feel-good hit”.
“However, in reality,” she says, “The novelty of the item usually wears off when you receive it, and this can push us into a pattern of seeking that feel-good hit from hitting the purchase button".
When it comes to living through uncertain and isolating times – such as a pandemic and a nationwide lockdown, for instance – we are even more likely to shop online to soothe our low moods and boredom, according to Hepburn.
“We reinforce purchasing behaviour [to make ourselves feel better] in the short term, but in the longer term we may end up stressed about money worries that build up in the long term”.
Be aware that “buy-now-pay-later” schemes aren’t always what they seem
One increasingly modern facet of online shopping, is the accessibility of online pay later schemes. Services like Klarna, Clearpay, Laybuy and Afterpay, for instance, offer the chance to purchase shopping and split the payment over multiple instalments, or delay it to a later date.
The popularity of these buy-now-pay-later schemes has soared in 2020. In December 2018, Klarna had 14,000 active users per month, and by July 2020 this number had risen to 460,000.
And 23 per cent of 18 to 24-year-olds have turned to buy-now-pay-later services to fund their spending since the start of lockdown, according to Compare The Market, even though youth unemployment is set to triple to the highest levels since the 1980s because of the pandemic.
It’s worth taking a closer look at the potential risks around these services. Earlier this year, Alice Tapper – a financial literacy expert and campaigner – started a petition to educate young consumers about these schemes.
Tapper says they “promote overspending” – an online shopper’s basket value increases by 55 per cent when shopping with instalments, and this is only helpful if the shopper has the funds for their haul in the first place.
“Due to the lack of regulation on these products, it's meant that buy-now-pay-later providers have the opportunity to present what is ultimately debt as something that's quite fun and sexy,” she says.
Clare Seal – author of The Real Life Money Journal and Instagram account @myfrugalyear, which charts her journey out of £27,000 worth of debt – warns how easy it can be to fall into a cycle of debt with credit schemes and cards. “You have to go into it with your eyes open," she says.
Taking steps to avoid overspending
If you are worried you are overspending with online shopping and it is causing you to get into debt or spend beyond your means, consider the following options for getting on top of the situation.
1. Remove apps and automatic card details
“Try to put as many barriers in place to buying as possible,” Hepburn says, suggesting taking apps that facilitate online shopping off your phone, as well as removing your bank card details from being stored online – making it more difficult to make that “one-click” purchase without thinking things through.
“The less automatic purchasing is, the more time you have to stop and think, and the less likely you are to hit buy."
2. Consider if it is worth using payment plans or credit card
Online shopping, and using a credit card or payment plans to pay for your haul, are not categorically bad habits. But it’s important to make sure you’re in control and doing it safely.
When it comes to using buy-now-pay-later schemes responsibly, Tapper advises that you ensure your default payment method on your most-used retail sites isn’t automatically set to a buy-now-pay-later scheme. Many of her case studies had “accidentally” used the service and “ultimately ended up in debt” because of it, she says.
3. Take a night to mull it over
Clare also suggests taking a night to mull over a more pricey online shopping conquest. "Always sleep on a purchasing decision if the cost is over about £20, to make sure that it’s a conscious decision and not just an impulse buy,” she says.
4. Think about long term purchases
The trick is to teach yourself to differentiate between what’s going to make you happy in the short term, and what’s going to be best for you in the long term, according to Hepburn.
“Buying is driven by short-term reward,” she says. “Bearing in mind the long term cost can help to balance the draw of the short term reward.”
5. Educate yourself
But above all, arming yourself with as much information as possible to take into these uncertain financial waters is key. “Equipping yourself with good financial knowledge is incredibly important,” Tapper says.
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