If you're finding it hard to stick to your holiday budget, you're not alone: If you look at the difference between shoppers' average expected spending and what they actually spent once the holidays were over, the difference is about $100. In other words, many people spent more than they had budgeted for. It's retailers' job to squeeze as much money out of consumers as they can, but that doesn't mean you have to fall for it. Here we look at some of the top psychological strategies stores use to get your money. If you're looking to keep your spending in check, be aware of these traps and do your best to steer clear. (For background reading, see Sneaky Strategies That Fuel Overspending.)

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Now that Black Friday has come and gone, it's probably safe to say that just about everyone has at least been tempted by what retailers call "doorbusters". Retailers dangled the prospect of appliances, electronics and toys at 70% discounts, and for the most part, shoppers went for it. So what's the problem? Retailers are in the business of making money, so any time you see a killer deal advertised, you can bet the supply will be limited. This doesn't mean you won't get the item you came for at the price advertised. Just keep in mind that if you come too late, the retailer is hoping you'll settle for something else with a higher markup.

Deep Discounts

Signs and price tags that scream of big discounts are common, but don't take their word for it. If you want a truly good deal, you'll have to do some of your own research. This is especially true at outlet malls, where price tags will often include a much higher "suggested retail price" as a reference point. However, this can be misleading because the item may never have sold for this price anywhere else. (For more insight, see Attention Discount Shoppers: Don't Buy Just Because It's On Sale.)

If you want to steer clear of this retailing trick, be sure to do some research before you hit the stores.

Pain and Suffering

If you've ever visited an outlet mall or subjected yourself to the holiday shopping rush, you may already know that the more pains it takes to make your way to the coveted item you hit the shops for, the more likely you are to buy it - no matter what it costs. This is borne out by psychological studies. In Ellen Ruppel Shell's 2009 book, "Cheap: The High Cost Of Discount Culture," she discusses how the act of making a substantial effort can make it easier for a person to justify a purchase. This occurs as a result of what's called "cognitive dissonance," which can create the need to feel more positive about a purchase because discomfort was involved.

Don't let a need to justify your trip cause you to spend more than you'd planned. In the same vein, it's also a good idea to make your shopping experience as comfortable as possible, and avoid shopping at high-traffic times.


If you're a smart shopper, you've probably become immune to making impulse buys at the counter. The items placed in this area are designed to tempt you just as you are pulling out your wallet – and it often works. However, stores also have other product placement tricks. In the grocery store, you'll notice that the higher priced goods are usually at eye level, because you're more likely to notice them. This is also why clothing stores tend to put sale merchandise at the back – they're hoping to entice you with some of their newer, higher priced good before you get there.

To avoid this trap, consider heading to the back of the store and searching in less visible places first. After all, many of the sale items were once featured in the high-visibility areas.

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    In 2009, the Journal of Consumer Research released a study that found that consumers who touched products in the aisles paid more for them than shoppers who kept their hands to themselves. This phenomenon may trace back to what psychologists call the "endowment effect," which states that shoppers will value an item more if they get a sense of ownership. You'll notice that electronics stores tend to capitalize on this trick by placing many items, such as cell phones, out on display for shoppers to touch. Just try leaving the store after you've fiddled with the latest smartphone. If you're not in the market for one and you don't trust your resolve, it's best to keep your hands in your pockets.


    Retailers love to boost their sales by tacking a few extra items on to your purchase. The most insidious of these last-minute add-ons is warranties. If you purchase electronics, you're sure to be tempted with some kind of warranty once you get to the till. This is a point at which shoppers are vulnerable, as they've already decided to buy something (so why not something else?) Warranties are especially sneaky in this way, as they attempt to exploit the shopper's stress about buying a big-ticket item and their fear that they may soon have to replace it. The truth is, fewer than 20% of people who buy a warranty actually use it, so consider if spending this money will actually benefit you. Also, consider that while many people assume a warranty is designed to benefit the consumer, it is actually just a money-maker for the retailer. In other words, retailers sell warranties because they expect that most shoppers will never cash them in. (For more insight, see Extended Warranties: Should You Take The Bait?)

    The Bottom Line
    It's easy to get carried away with holiday shopping, but knowing the tricks that retailers use can help make it easier for you to avoid falling prey to their ploys. That said, saying "no" can still take a lot of resolve for some people. As you complete your holiday shopping this year, be sure to leave the house armed with a firm budget, a shopping list and a desire to outmaneuver retail's most common spending traps.

    Find out what happened in financial news this week. Read Water Cooler Finance: Steady Stocks, Big G's And Madoff News.

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