You may have heard about the “Diderot effect”, an effect that fits perfectly to the Black Friday Sells right after the Pandemic Lockdowns, where people crammed over as soon as the doors of the shopping centers open, worse than bulls Saint Fermin’s festivities in Spain, to use their credit cards and shop like there's no tomorrow.
Knowing about the dangerous Diderot effect will help you control yourself and the expansive nature of your buying brain.
Diderot was a French philosopher who once had the misfortune to receive a new robe as a gift to walk around his house more comfortably (sounds familiar?). And I say bad luck because, soon, he realized that his sumptuous and velvety robe did not match the other things in his house, so he decided to buy a new chair, a new rug, a new table; all of this for these things to be up to the level of his robe. Diderot lost a lot of money on these purchases and, worst of all, he no longer liked his house after this, because he felt that it was not “his”.
In short, the Diderot effect is the chain of purchases generated by the purchase of a new item. Like when you buy a dress to go to a party, but then you need a handbag and matching shoes, or when you move to a more expensive neighborhood, and therefore you have to transfer your children to a more expensive school, buy a more expensive car and pay more for the groceries that they sell in the stores in the area. All just to fit in.
If the Diderot effect seems like the story of your life, keep reading, because we will tell you how to get away from those clutches that inevitably lead you into a consumerist spiral.
Life doesn't fit into a single “concept”
Firstly, let us be aware that we live in a “concept” society that consists of inventing a “concept” for everything. Your house is “minimalist”, your car is “hipster” and your clothes are “boho chic”, or your lifestyle is “zen”, you raise your children with “attachment parenting”, but you dress “preppy”. It seems that our entire existence could easily come out of a label. You no longer have to think about anything, lucky you! The identities come packaged and ready to consume. Only thing is that life is never that easy. People come in different flavors and colors, and therefore the aspects of our lives as well.
Many of these self-imposed labels are dictated by external stimuli, that is, by society, which often dictates what we can and cannot do. This is a good thing in many cases, since countries benefit from organized policies, but bad when you manage your consumption according to what others dictate to you and not according to the reasonable and sensible management of your finances.
Internet, globalization and social networks have convinced us that we must “live by a standard”, and we don't blame you, because belonging is one of the best feelings of being human. But also not being in debt: we promise you.
In other words, the first thing you can do to prevent the Diderot effect is to refuse to live to keep up appearances.
Identify cross-selling
Think of cross-selling as the bogeyman. It is so negative for the maintenance of good finances that even governments have taken action on the matter to stop its progress.
A cross-sell is when you buy something and the seller tries to sell you something else with the idea that it'll be “complementary” to the first product you bought. Or when a magazine promotes a watch along with the image of a car and a dress. Let's say you start with the watch, but the salesperson makes you realize how cute it would look with a blouse, so you buy the blouse, but then they show you the matching shoes and… you get the idea.
Cross-selling also applies to larger and smaller purchases, such as a new apartment that you buy another parking lot for or a car that you rent for which you end up paying double to add GPS, unlimited booths, cleaning and a full tank; Oh, but wait, the city maps are charged separately.
If you have the resources to buy all these bundled goods, good for you, but if it turns out that you're soon up to your neck in debt, you've spent all your savings and even your children's tuition, it's time you stop and start getting comfortable with what you have.
No object is going to give you a sense of balance or harmony in your life if what it causes you is anguish.
What do the experts suggest?
Although this goes beyond the scope of financial education, experts recommend that you evaluate the way you relate to things and that you evaluate the extent to which you are dominated and conditioned by your belongings. Do they say what you are? Who are you without them?
The Diderot effect consists of the purchase of a single thing makes you fall into a shopping spree to elevate your whole life “at the level” of this new thing. You think that if you don't make those purchases, you won't be happy.
However, experts agree that human beings like to accumulate. Let's accept this, let's be aware of the tactics that marketing applies to us, the enthusiastic consumers, and let's see some tips that we can put into practice to reduce those “consumer urges” when they catch us in the middle of the day and with a quota on the card of credit.
— Ask for help: If you followed step one, and you already know that when you are hungry you buy more or when you fight with your boyfriend you spend thousands at the hairdresser (to compensate), ask for help. Anticipate these behaviors and limit your access to your savings or cards. Ask someone objective and whom you can trust to go shopping with you and tell you with certainty if your purchases will be reasonable. You can also put your money in accounts that you can't easily get it out of, or you can invest it for 30 or 60 days at a time. There are people who manage to save an entire month's salary, with which they pay day-to-day expenses, and the salary that comes in is invested in promissory notes in a short time. Thus, when they go shopping, they remember how difficult it was to save that money and spend it more carefully and, in addition, they do not have immediate access to the money they have in the bank.
— Set limits: Put limits on your credit card. If you have decided to buy a television and your maximum budget is $300, but you see one for $340 that you like more, it is certain that you are going to break your limit, but you won't be able to do it if your card has a spending limit. It also helps if you make a monthly spending budget and commit to yourself and your family or partner not to exceed it.
— Become a minimalist: Since every lifestyle fits within a label today, if you like to belong to a specific one, choose minimalism. The trend harbors concepts far beyond decoration and promises you peace of mind and an improvement in your life.
— Meet your deadlines: If you have realized that you have an uncontrollable spending problem, establish deadlines in which you cannot buy and others in which you can. For example, decide that you will only buy during the night, after 8pm, or only during the last days of the month if you have free money left. This will make you think twice about the real need to make a purchase and will prevent you from making impulse purchases. Shopping, especially online and social media, is brilliantly designed to get you to spend on the spot, so if you wait, you're likely to end up not spending.
Finally, the idea is that you buy things and experiences that make you happy. Question if what you'll buy will make a positive change in your life (because it's valid wanting to improve) just don't do it to satisfy the tastes of others or to maintain the appearance of being a person that you're not or would like to be.
It's better to feel free than not being able to sleep at night.
So the Diderot effect is bad?
Yes and no. It's good for those who sell something, because they can increase their profits, but it is bad for you if it's putting you in debt and leading you to ruin.
It is when you focus your happiness on shopping that you should be aware of the Diderot effect and avoid it at all costs. Because this behavior will affect your ability to save, create assets and prevent you from obtaining that long-awaited financial freedom.
Article translated by Rodolfo Schaefer
