The Real Cost Of Living

We shop at Costco about once a month or so. It’s about a 40-minute drive across the bridge and into Kelowna. One day, after we returned from our shopping trip, I noticed that we had been charged twice for one of our purchases – $18.99. The thought of going back over the bridge in rush hour traffic (which I swear is twice as bad as Calgary), just before supper made me cringe. Luckily, Costco has a flexible policy and I was able to get my refund on the next trip. How many people, I wonder, who would normally take the time to shop around for lower prices and clip coupons, etc. would have just let it go rather than return to the store?

Here’s another example. I purchased a pair of Reeboks at Zellers (when they were still around). A couple of days later I saw the identical shoes for 55% off in their flyer. I took the receipt to the store and received my refund. When I mentioned this to a co-worker, she said, “I would never do that!”

Why not? Is it embarrassment? You don’t want to make a scene? You don’t want to look cheap?

Behavioural economics, the study of the neuropsychology behind how we behave with our money, has won Nobel Prizes. There’s a lot more going on than dollars and cents when it comes to making decisions about our money and our lives.

Economics has finally recognized that we are not rational creatures; we’re not all about the accounting and spreadsheets.

Our emotions affect our choices

Why do we want to prepay our mortgage? It’s a sense of security.

Why do we own an expensive car? It’s a symbol of what we are working for and what we think we deserve.

Why does this man use his life savings to pay for his son’s education? He wants a better life for his son and knows he will care for him in his old age.

We all know how important insurance and a will are, but why do we often put off dealing with them?

Can you change irrational behaviour?

We all want to make better decisions in life, decisions that make us happy personally as well as financially, and many decisions have a personal cost as well as financial costs.

Changing behaviour means acknowledging that there are factors beyond money that influence how you spend, save and make plans for your money.

Listen to your inner voice. Why do you make financial decisions? Is that your dad’s voice in your head? What will people think? Are you anxious? Do you want to feel secure? Do you shop when you’re bored? Do you just avoid anything financial because you don’t like math? How do you rationalize your behaviour?

You are more likely to change when you recognize where you are coming from – your motivations, your needs, your fears, and your dreams.

Final thoughts

Before I got into banking and finance, my university major was psychology. On first glance you may think that these two fields are polar opposites. But personal finance isn’t just about the stock market returns, interest rates and insurance. It’s the way we have been brought up to think about money that can help or hinder us in making decisions.

From career choice to homeownership to relationships to parenthood, money is about much more than numbers. Our money choices sometimes have less to do with money than with what we want: happiness, security, peace, and what our time is worth.

In this monthly series I’ll explore how emotions and perceptions are a large component of the financial decisions we make and each choice has a personal as well as financial cost and reward.

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  1. MK on July 14, 2015 at 4:46 pm

    I love this and im looking forward to reading your posts!

    This post came at a great time. I was about to purchase some dresses for my baby daughter. But I don’t NEED clothes for her. She has her brothers clothes. Many of them gender neutral, very cute and gently used. Some are brand new! I realized I was going to buy something I don’t need because of emotions, an expectation I was putting on myself, a cultural norm maybe?
    So what if she does not have dresses. I just put the money I was going to spend on dresses toward her education fund instead. It’s on top of the yearly $2500 I already contributed but I feel good that that money will now grow for her!
    This article came at the perfect time! Thanks!

    • Boomer on July 14, 2015 at 6:17 pm

      @MK: I can relate. As a mother of sons, I used to look longingly at the cute, girly clothes. Do you think it might have something to do with dressing up dolls as children?

      Good for you to realize the money could be spent on a more worthwhile cause than something your daughter will grow out of very quickly.

  2. Maggie on July 15, 2015 at 5:06 am

    Every week I check my grocery receipt (Loblaws) before I leave the store. It is wrong about one week in three. Yesterday I immediately returned a bag of rice chips (I’d misread the price reduction, only the BBQ ones were on sale) and queried the price of the ground beef as different from what was displayed at the counter. I got the ground beef for free because of the discrepancy.
    When I tell friends to check their receipts they just say, oh I can’t be bothered to do that!

  3. Liz on July 15, 2015 at 5:21 am

    I too check my receipts-before I leave the store now-having learned the hard way like many of us it is a pain to go back. Many people do not know about the scanning code of practice(SCOP)that the above poster used to get their item free. With regard to the BBQ chips I often find things mislabeled or right over or beside a sale price sign-if you take the time to read the fine print it is not on sale but I think sometimes they mislead you on purpose! I also hate stores that price in multiples and charge you more if you buy only one, I also frequently find errors on my receipt-especially if it is the first day of the new flyer and all the prices have not been correctly entered yet-usually you can get a couple of freebies for paying attention and requesting it-the stores do not have to offer SCOP but you can request it if the store participates in SCOP and you know your rights. I have no issue asking to get it free when the store has made an error!

    • Boomer on July 15, 2015 at 9:30 am

      @Liz: I’ve been burned on a store’s multiple pricing policy in the past, especially on cans on soup where some are on sale and not others but the shelf label is not clear. I think I’ve got it all figured out now and take note of “combined varieties” or not.

      I usually check my receipt at the store, unless I’m distracted (e.g. by a chatty cashier). It’s my husband who rolls his eyes and complains about standing in line at customer service.

  4. JohnnyStash on July 15, 2015 at 6:33 am

    I always check receipts before leaving the store. It is virtually impossible to keep an eye on the register / screen / cashier while you are unloading your cart. It came to light about 11 yrs ago when i purchased a case of baby formula and the elderly cashier struggled with scanning it, hence it came up twice. I didn’t notice it until I got home. The grocery store went good for it, but I realized that I must have put them in a difficult spot and they could have easlity said “no”.

  5. Irene S. on July 15, 2015 at 6:56 am

    I have no problem in requesting the price adjustment or reversing a double charge. Why should you give someone something they are not entitled to? It’s not about being cheap. It’s about looking out for yourself and making the most of your hard earned cash.

  6. Patricia Gass on July 15, 2015 at 9:10 am

    Excellent post! I couldn’t agree more!

    In my experience, it’s the psychology (i.e. behaviour, emotions etc) that hold people back from being successful with money much more than their knowledge/skills.

    Just like losing weight or becoming more fit, we often know what we SHOULD do but can’t bring ourselves to do it.

    Look forward to reading more posts!

  7. DivGuy on July 15, 2015 at 12:08 pm

    Looks like interesting posts to come! Reminds me of my “Consumer behaviors” course at University. Emotions and perceptions do influence A LOT of our financial decisions. I think I managed to take more objective decisions throughout the years, but still…



  8. mary on July 17, 2015 at 5:50 pm

    Every year I have enjoyed a girls “shopping” trip to the U.S. We would find ourselves in a collaborative frenzy finding deals ( mostly at Macy’s)and convincing each other that we really needed all those clothes.It was a form of reward for the year of hard work. The crazy thing was that I wore scrubs most of the time and barely wore all those clothes.
    As we have all matured in life we savor the true benefit of just being together as a group of friends. Oh we still shop but instead of thousands of dollars we spend much less on items that we truly need.The real reward is spending time with friends and experiences.

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