Right about now you should be feeling some real pressure to plan the Black Friday attack. You wouldn’t want to miss out right?
In fact, if you do, you could end up missing out on some serious sales…
If this is how you are feeling, then let me tell you why you are the perfect target for advertisers, marketers, and salesman.
How Psychology Affects Your Black Friday Decisions
Black Friday is notorious for door busting sales, once in a lifetime discounts, and tag lines that go on for days. But be careful, you might be jumping into a shark tank.
Let me introduce you to something psychologists call FOMO. It stands for “Fear of Missing Out.”
Simply put, FOMO removes logic and reason and replaces it with fear. What seems like a useless product, bad idea, or really boring evening, is tainted by the fear that you will miss out on a limited time offer, an amazing investment opportunity, or the night you meet that special someone.
Instead of using logic, decisions are based on fear of regret. Regret is an incredibly strong emotion, an emotion that can’t be fixed. Once you regret something you can’t go back in time, unfortunately. This can be a powerful motivator in the decision making process.
You can bet advertisers will be appealing to FOMO to get you buying.
Examples of FOMO We All Face
Right now I’ve got an ab belt in my closet. Have I ever used it? No. So why did I buy it? Well, the timer on my TV was winding down and the pitch I heard was too good to miss out on. Instead of appealing to logic, I was motivated by fear. According to the infomercial, It was a limited time offer, and if I didn’t buy then, I wouldn’t save the money. My shortcut to savings was nothing more than a financial setback, and a really dumb one. I’m guessing we can all relate.
Another great example of FOMO is found in the fun world of investing. For centuries, people have lost money by making decisions based on fear. Let’s look at a few:
Investors in the late 90s didn’t want to miss out on the Tech Boom, and paid the price when it came tumbling down.
From 1990 to 2008 Bernie Madoff’s investment fund was all the rage. Investors were begging Madoff to take their money. Ultimately he was sent to prison and investors were left empty-handed.
In 2012, investors didn’t want to miss out on sharing the profits of one of the most successful Multilevel Marketing Companies of today, Zeekler. It turned out to be nothing more than a ponzi scheme, costing investor nearly 600 million dollars.
The biggest problem is people don’t want to miss out on high returns. We all want the fast track to wealth. Slow and steady is often dull and boring. Though rarely chosen, it often wins the race. I’ve often been told that the safe strategies I use in my personal finances, like Infinite Banking, are too conservative, or outdated. But while others have lost money over the last decade, I sleep at night. After all, the tortoise did beat the hare right?
How To Avoid Making Financial Decisions Based on FOMO
Avoiding FOMO based decisions could literally save you hundreds, or even millions, over your lifetime. Here are a couple of ways you can avoid it.
1. Understand that the pain of missing out is often times far less than the pain of a bad decision (some of Bernie Madoff’s investors lost millions). Rarely is it the last chance to buy an item, or the last good investment opportunity out there. There will be future opportunities.
2. Don’t make snap decisions. Advertisers and marketers prey on quick decisions. By taking time to think it through you can gain some clarity.
3. Do some research. Consult other experts in the decisions you make. They may have enlightening information that could resurface the logic and reason your fear of missing out may be suppressing.
When it comes to money, there are few shortcuts, and a lot of setbacks. Try to avoid letting fear guide your financial decisions, and you’ll save yourself a lot of money, and a lot of headache.
Jake is a Certified Financial Wellness Educator and contributor at Moola Mind. You can follow him on twitter @jakeathompson.