Kit Yarrow, a consumer psychologist, says people can alter their spending habits this holiday, feel empowered and fight the doom and gloom feeling that is affecting many.
As a professor of psychology and marketing at Golden Gate University and author of Gen buY: Why tweens, teens and twenty-somethings buy and how they’re revolutionizing the way we all shop (Jossey-Bass, August 2009), Yarrow provides insight into why people buy and shop and how the current economic situation is affecting this year’s holiday spending habits. She explains why each generation might be affected differently and offers some coping strategies
Q. Are peoples’ attitudes toward holiday spending changing this year because of what is happening to the economy?
A.Recent events in the economy have resulted in everyone experiencing a sense of loss – not just the loss of money but also a loss of trust and security. So yes, we’re seeing a shift in peoples’ attitudes toward money and spending – partly because of the loss of discretionary funds, but also because of a decreased sense of security.We’re certainly seeing more anger and depression this holiday season. The holidays are always a busier and consequently more stressful time of the year. It is no surprise that this year is more difficult with the depressed mood in the country and lots of spending adjustments. That makes it doubly important that people take care of themselves with rest, exercise, healthy eating and quality time with friends and family.Â
Q. Is this loss causing people to be downcast? Is there an opportunity here to do things differently?
A.Forced frugality will give folks the chance to really examine their priorities and reconsider the role and meaning of gifts and holiday expenses. With less comes more appreciation and gratitude for what you have and what you’re given. It also means that people have more time and attention to devote to each other, which is psychologically healthier. After a period of great prosperity, this change presents a difficult transition for many that causes stress and exacerbates negative emotions. But people are resilient, more than they think, and will adjust and create more frugal social norms to live by.Â
Q. From news reports, we are seeing a drop in spending in all market sectors. How does this affect people psychologically and what can they do about it?
A. People are spending much, much less this year and are very much focused on practical gifts or bargains. According to the International Council of Shopping Centers, this November’s figures showed the biggest drop in monthly sales in over three decades.
Because our entire society is facing a new economic reality – we’ll have to rely on each other for strength and reinforcement of a simpler “less is more” mentality. Pressure to “keep up” will be diminished – something I think many will appreciate. Acquiring and maintaining “stuff” takes a lot more time and attention than people appreciate – that time and attention could be devoted to other people, which is ultimately a greater source of happiness.
We all need to connect with others no matter what’s going on in the economy. Holiday cheer comes from what you give of yourself to other people, not just what you buy them. Noticing, caring about and celebrating those connections are the most valuable gift you can give. And it’s what people really need – now more than ever. Focusing on others is also a great way to feel good; it’s a proven source of happiness — and it’s infectious.Â
Q. Who is faring worse, men or women, when it comes to changing their spending behavior?
A. I don’t think it’s a question of who is doing worse. I think it’s about the process of acquiring a new attitude about shopping, and it’ll happen in phases. Men and women shop very differently and so naturally, they’ll go about adjusting in different ways. For starters, this year men are hoping to purchase bigger things like electronics — with the rationalization that they’ll ultimately save money — and women are more focused on strategizing around bargain-hunting.Â
There are some whose circumstances are beyond their control. For those living financially closer to the edge, this will simply be a very rough time – and a time to ask for help if they need it. Single mothers are having the hardest time.’Â
Q. As we all try to buy less this year, will today’s children and teens have a harder time going without that new Wii or Game Boy since the majority of their leisure time is spent playing with electronics? Will the older generations manage without their indulgences?
A. Younger generations will have a tougher time. In Gen buY, I talk about how this generation has grown up with roughly five times the discretionary spending power as their parents had when they were younger. Not to mention that it takes more equipment to be young today – electronics aren’t optional.
Baby boomers, on the other hand, were raised by “Depression babies” and acquired values that stressed frugality and saving. When this group became parents, they wanted a different life for their kids, which has had tremendous benefits, but also left Gen Yers unprepared for this economy. Though most Gen Yers understand the new reality, many still want and even expect the same amount of goodies, not less.
I think parents have to be very direct about money and explain the changes their kids can expect. Parents often don’t talk about money with their kids because they don’t want to worry them. This backfires because kids still sense changes, and hear things. Bad news, delivered by calm, in-control parents, will cause far less anxiety than no information.
Source: American Psychological Association
