Chapter 1: Why do we make impulse purchases while scrolling on social media?
Hey team, look, you don't need me to tell you the social media scroll can be so dangerous for your wallet. You weren't planning to buy anything, then you were scrolling, and now there's something in your cart. And this happens to most of us. The problem isn't actually necessarily that we're bad with money. The problem is that spending has never been easier
more engineered, frankly, especially when you're online. And there's some new research out from the Global Fintech Revolut, which really puts some numbers on what most of us already feel. 61% of New Zealanders make purchases on a monthly basis triggered by social media ads. And the problem is just about half of us then go on to regret that. It's not that we're stupid.
It's that there's a really big wall for your wallet and some of the tricks used online aren't very fair. So the lovely team at Breakfast asked me to come on and talk about this research and then not only how the system works, but how we can fight back. And I dug into that with them. They were kind enough to say I could put that conversation here for you as well. So enjoy.
Chapter 2: What manipulative tactics are used in online shopping?
We weren't planning on buying anything. Just a quick scroll, a couple of videos here, right? Maybe a laugh, maybe a like, and then suddenly it's sitting in your shopping cart. Sound familiar? New research from fintech company Revolut alongside YouGov reveals a striking trend.
61% of New Zealanders admit they regularly make purchases triggered by social media ads, with some people spending up to $500 a month. For more, independent financial journalist Frances Cook joins us now. Frances, good morning. 61%, does that mean that most of us are suckers?
Yeah, and the worst part is as well that almost half of us then go on to regret it. So, okay, if this is in your budget and it's working out for you, fine. But if you're then going on to regret it, you're feeling bad and you're thinking, actually, I was supposed to be staying on a budget and it's not working out for me, fine. That kind of sucks.
And I think the trick here is it's the online shopping, because online shopping, they use something called dark patents, which is all totally legal. Well, at least in New Zealand, some of these tactics aren't allowed overseas, but it's totally legal here in New Zealand, but it's just super manipulative.
Chapter 3: How prevalent are impulse buys among New Zealanders?
It's things like countdown timers to put the pressure on. It's things, right? It's, you know, when it's really, really hard to unsubscribe. We've all been there. You're trying to cancel a service and you're going through layers and layers and layers of it. And it's almost like as if you walked into a shop in real life. And as soon as you walk in the door, they're putting stuff in behind you.
So it's hard to get out. That's kind of the online equivalent. It's super manipulative online.
Included in the dark pattern. I was going to say dark arts. It kind of is dark arts, right? When you click it, let's say you wanna buy a t-shirt, right? You click on the t-shirt and it says, 10 people are looking at this right now.
Chapter 4: What are dark patterns and how do they affect online shopping?
Sort of flashing there saying, low stock. Kind of warning bells, right? Saying you gotta get this quickly, people are gonna get it otherwise.
Exactly, that's a classic dark pattern. And as well, it's really hard because then these ads will track you and they're going all around the internet following you. So you've really got to one of the problems with these social media purchases is it's too easy. So you've kind of got to fight back. One of the ways that you can take control of your budget again is putting the friction back in.
And it can be really simple stuff like unsaving your credit card info from your phone. Do you know the amount of money I've saved just because I don't want to get off the couch and go ahead? Here's my credit card.
100%, yeah.
It's so good. So lucky when it's just there though as well.
Do you have to remember your credit card details for next time?
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Chapter 5: How can we fight back against impulse buying?
Absolutely. Yeah, exactly. So you're putting that friction back into it to make it a little bit harder for yourself. And also things like, you know, they get you when you're tired. when you're feeling a little bit tired and worn down at the end of the night.
I mean, the old social media scroll on the couch at the end of the night, we do love it, but that's really when you're likely to impulse buy.
If you are scrolling, you're also likely to be in a position where you are vulnerable to that sort of thing, right?
That quick dopamine hit. It's cheap, it's easy, but it's actually not that cheap for your wallet. And another thing that can be good there is a 48-hour pause. If you put in a rule,
Yeah, but if it's flashing and you're saying it's going soon, 48 hours, that's too long.
That's why they're getting it. And also that stuff is often a lie. So you put in that pause and you say, okay, new rule, I can have it if I want it, still in 48 hours.
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Chapter 6: What strategies can help control online spending?
The number of times you'll find you don't want it anymore.
How do people actually identify that they are doing this, that they're actually leaking money?
This is the issue, right, as well. So it plays into when you're tired, when you're a little bit less resistant. And also the categories that they found in this Revolut research was super interesting because I think that also shows us what's happening. So the biggest spend was clothing, then electronics, then skincare.
So it's all of those things that play into that quick dopamine hit or also status, feeling like you're a bit better, a bit more elevated. And so what you really wanna do
to fight back long term is if you are thinking about what really truly adds to your life because okay fine if you want this stuff have it great but if it's not adding to your life and you're having regret afterwards then that's really not worth it but it's hard to tell in the moment so you want to think about what's adding to your life what's not
at putting in those pauses for even longer some people will do a whole no spending month which is quite intense that's when you're not allowed to spend anything except your groceries and your utilities for a whole month and that can really force you to think about what's adding to my life what do i actually miss and what do i not miss
If that sounds a little intense, that is quite intense, a whole month, you can do financial fasting. So pick one day a week and you just don't spend anything that day. It's so satisfying, isn't it? When you get to the end of the day and you know that you haven't spent money.
So is there a cheat day where you can just binge though?
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Chapter 7: Who is most susceptible to online shopping temptations?
That's half the problem. Just before you go, who is most susceptible here? Is it Gen Z because they're online more?
Well, yeah. And I think as well, when you do a little bit less life experience, you're less used to being like, okay, knowing yourself and knowing how to put those barriers. Yeah, exactly. So yeah, Gen Z has hit the worst by it, but we're all guilty of it.
All right, Frances Cook, thank you so much for joining us.
This podcast can only give you general information about how things work in most situations. It's not individual financial advice. If you're after that, a financial advisor is always the best bet.