Bottom Dollar Effect: How Money in the Bank Boosts Your Buying High

Anna Williams
Posted

You probably already know there a ton of practical reasons why you shouldn’t blow the last of your paycheck on that shiny new gadget upgrade.

But it turns out that having substantial funds left in the bank when you buy something new might also be important for a more fun reason: you’ll reap more satisfaction from your purchase.

At least, that’s one of the takeaways from a new study published in the Journal of Consumer Research. The researchers are dubbing this new phenomenon the “bottom dollar effect,” finding that “spending that exhausts a budget…decrease[s] satisfaction with purchased products relative to spending when resources remain in the budget.”

Translation: We’re less satisfied with our buys when we’re paying with dwindling funds than when we have money in the bank—even when we’re shelling out the exact same dollar amount.

To test this effect, the researchers conducted six studies that measured satisfaction after study participants made a purchase. The results showed that shoppers experienced more gratification when they knew they had plenty of other financial resources left after shelling out for the purchase.

Want to make happier spending decisions—and avoid that tug of guilt know as buyer’s remorse? The study authors recommend never making a big buy when it means draining your checking account down to the double digits to do so. At the same time, the authors note that stores might use this “bottom dollar effect” to their advantage—and peg big shopping events to paydays, when consumers are more likely to feel free to spend that new cash. So being more in-tune with when you’re most susceptible to shelling out can also help to keep your spending in check.

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