The Domino Effect of Shopping for New Things
We all have experienced this. You walk into a store to purchase specific items and your goal is to shop for ONLY those items. At first, it looks like you’re sticking to your shopping list. But like a pack of dominoes, your plan begins to fall apart. You pick item after item and end up spending much more than you intended… Even though you just googled “how to save money”. ?
A yellow top leads to a mustard scarf – because they match.
Or a brown shoe leads to a brown belt and tie – because colour-coding is your thing.
The Diderot Effect
This behaviour is called the Diderot Effect. It was made popular by James Clear in his book ‘Atomic habits’. He explained that“the Diderot Effect states that obtaining a new possession often creates a spiral consumption that leads to additional purchase.”
It was coined after Diderot, a man who after making some money, decided that he needed to upgrade his possessions. It started with him getting a befitting robe but he soon replaced item after item in his house to match his “new status”.
This is how buying more than you planned happens. It always begins with just one purchase that causes the chain reaction.
How it can negatively affect you
Shopping is obviously not a bad thing. It only becomes a problem when it is done subconsciously.
When you shop online or offline, you have to be very aware of what’s going on.
Allowing the Diderot Effect to dictate how you purchase items will lead to financial frustration. This is because you will always spend money meant for something else.
How to save money by conquering it
Start by focusing on the things that matter. You can learn how to save money when you differentiate between your needs and wants.
You might need new shoes because your old ones are bad. What you might not need is a new belt because you have others that are just fine!
In this article, James Clear shares tricks that are simple but very helpful. Here are a few you can incorporate right now.
Reduce Exposure – Instead of taking your card with you to the mall, withdraw the amount of money you need and keep your debit card away. This helps you eliminate the temptation to go on a shopping spree. Shopping with your card in hand can be sweet, but will eventually lead to tears when you get home.
Go one month without buying something new – You know the way there are #NoSodaMonthChallenge or #30DaySquatsChallenge, you can self-impose a #NoNewPurchaseChallenge. This is especially useful if you are one to always buy new items, whether they are essential or not.
On this challenge, you’re only allowed to purchase groceries and life essentials. When you’re tempted, just remember to say this out loud “Ope from Cowrywise” is cheering me on.
Benefits of conquering the Diderot Effect
- You can learn how to save money by simply being disciplined. Saving money goes beyond locking it in your Cowrywise account. You will often have some money to spare at the end of each month when you stick to your budget.
- You strengthen your wealth creation muscles. Many people have a skewed understanding of what wealth creation means. It is not about “blowing someday” but about cultivating the right money habits today. Whether you make N50,000 or N500,000,000, you can begin to create wealth. Read 7 Money Nuggets From “The Richest Man In Babylon”. The second nugget is very relevant to conquering the Diderot Effect.
- Finally, it will restrict you from hoarding. Hoarders collect, collect and collect even when it is not necessary. The sad part is that collecting is not free! For example, many people purchased heaps of toilet paper at the start of the Covid-19 lockdown. Was it necessary? Or did stocking up on food items lead to other purchases out of fear?
Shopping aisles are curated to entice you. That’s why we want you to be in charge of your money, not the other way round.
Now that you know what the Diderot Effect is. Has it ever affected you?
What did you purchase subconsciously and how did you come off it?
Share with us in the comments below.
How can I collect my money back once is mature
You sell the units.
Hw can I get my money back…. When I have emergency cases….. cause am in need of it now??
How can I collect my money back once is mature.on mutual benefit
there is a sell option …or am I wrong?
Yes, there is
What a great teaching today Mr. Ope. Thank you sir. Please, i plead for more of these teachings
Well explained, well understood
Thanks for teaching Mr ope
Good and straight to the point.
Teaching is in-born in you; keep it up.
How can I turn my daily savings to investment for Mutual funds
Once they mature, you can transfer them to mutual funds.
I always love your teaching… Can’t wait for another ???
Very much thanks for this update. But please put me to light in a situation you are to contribute a fixed amount to run for let’s say three years and along the line one is not able to make it to the end due to unforseen circumstances after a period of say five months. What will happen to his contribution?
It will keep earning.
What about me that I invest with #1000,and I cash back with dat 1000,which kind of invest is that
This is insightful and i like the pizza explanation thingy. Is mutual fund risk free or there is any chance of default?
Thanks for your kind words. There varying risk levels for mutual funds. On Cowrywise, we have hem categorized from low-risk to high-risk. To find your best fit, we’ll take you through a short risk assessment.
Well understood…cheers?
That’s great to know.
clementogbewe@gmail.com
What is the parcentage interest rate of all the mutual funds?
Lol! May be free investment ,???
Ope ?
Thank you very much for the explanation. It breaks the whole concept down to perfectly understandable bits.
Now, my question is this – high risk mutual fund investments, where the YTD earning is something negative (as sometimes seen on the CowryWise platform), how do people actually make money from those?
I am always happy and expectant to get a mail from you, Ope, because I know I am about to learn something new.
Thank you for teaching with the whole illustration, I understood mutual funds better.
PLEASE I WOULD LIKE YOU TO EXPLAIN CALL UPTION AND HOLD UP TION
How do you know the maturation period
Hi Henry.
Only savings plans on Cowrywise have maturity dates.
You can purchase and sell your investments on Cowrywise at any time.
However, we always advise you to stick to a long-term investment strategy.
Thank you vary much ope for your explanations.
My question is can one deposit dollar In cowrywise stash??????????.??..
Nice of u cowrywises keep it up.
I believe cowrywise is gonna make this country different.
Why did they stop automatic debit oooooooo