As many prepare to get their finances in order for the New Year, new research has revealed the one habit that will reveal whether you’re good or bad with money.
When shopping, the decision to go for quality or quantity reveals a lot about the state of your finances, according to a new study by researchers at the University of Colorado Boulder.
If you tend to opt for cheaper products and buy more of those items, you have a higher chance of spending more money in the moment and accumulating more debt in the long term.
“Buying more (things) makes it harder to track spending,” said Rodrigo Dias, assistant professor of marketing and co-author of the study. he told Money.com.
“This can lead to unintentional overspending, which accumulates over time.”
Dias said the data collected in the study shows that this simple shopping habit can reveal a lot about a person’s financial situation.
This is largely because consumers tend to be very consistent with their purchasing habits, he explained.
For example, if you buy high-quality shoes but few pairs, this is usually the way you shop for other things, such as food and furniture.
Researchers Believe A Shopping Habit Will Reveal Whether You’re Good Or Bad With Money
The data, collected from 24,000 shoppers, also found that quantity-preferring shoppers actually spent more overall, racked up more debt, and had difficulty paying it off.
In a shopping simulation, quantity shoppers selected $89 worth of products, compared to $79 for quality shoppers.
According to the study, 26 percent of quantity-focused shoppers saw an increase in credit card debt over a one-year period.
While only 13 percent of quality-focused buyers saw an increase in their debt in the same period.
Debt is also likely to stick around longer for quantity-focused buyers because frequent purchases mean more of their income is consumed by spending rather than paying off existing debt.
There are several factors behind our purchasing habits, Dias explained.
These may include the price of more expensive but higher quality items, but also other cultural, psychological and economic factors.
Quantity shoppers, for example, often struggle with compulsive buying or low self-control, Dias argued.
26 percent of quantity-focused shoppers saw an increase in credit card debt over a one-year period.
The study concluded that quantity buyers tended to have to reduce overall financial well-being and that this, in turn, can push people to buy in quantity.
“This finding is particularly worrying,” he says. “It points to the possibility of a cycle of financial vulnerability, where financial struggles lead to purchasing habits that exacerbate those struggles, creating a vicious feedback loop.”