Mental Accounting and the Danger of Trader Joe’s

I have a budget dilemma, and it stems from my troubled relationship with Trader Joe’s.

Shopping at Trader Joe’s is fun. They always have new products to try and everything at TJ’s seems so tempting and inexpensive. We have a bottle or two left of Three Buck Chuck, but we need to replenish our supply. It’s a thirty minute trip each way through heavy traffic, though, so I haven’t been since March. I keep delaying the shopping trip, and that’s probably the best thing for my budget.

Don’t get me wrong. I think Trader Joe’s is a great source for fine cheese, dried fruits and nuts, cookie butter and cheap alcohol. It’s a terrific place, and I love going. I’m not complaining about their prices, either. I can get things at TJs much cheaper than elsewhere.

My problem with Trader Joe’s is that going to Trader Joe’s doesn’t replace my regular grocery trip. I don’t stock up on eggs, milk, bread and produce. Instead, I get sucked into the TJ’s experience and buy things that I don’t need, like fine cheeses and cookie butter.  With a few exceptions, like wine, I buy foods that would never make it into my Food Lion cart. I think “Doesn’t that look good?” and never think about how those specialty foods fit into my food budget.

There’s a time and a place for fine cheeses and cookie butter, and unfortunately for me it isn’t right here and now. We’ve realized that we are spending a lot on groceries, and running out to Trader Joe’s would not be helping. Without a change in shopping strategy, Trader Joe’s is a danger to my budget.

Identifying the Problem

Is my problem a lack of self-control? Maybe. I see Chili Lime Cashews or the Chorizo/Serrano Ham pack, and I find it difficult to resist all of those exotic and delicious-looking food offerings. I don’t think my problem is solely self-control, though. World Market has lots of exotic and delicious-looking food offerings. If my problem is self-control, why can I go into World Market and ignore everything but the reasonably-priced coffee with no problem?

Maybe my Trader Joe’s problem has more to do with mental accounting.

Mental accounting is when you assign money to different categories with arbitrary spending rules. For example, you might drive 10 minutes out of your way to save 5 cents a gallon on gas, but buy a gallon of milk at the same gas station instead of going to the grocery store where the milk is $1 cheaper. If you buy 20 gallons of gas, it’s the same $1. Mental accounting means that in this case you value the extra dollar you are saving on gas more than the extra dollar you are spending on milk.

You’ve made a choice to save an extra dollar, and a choice to spend an extra dollar, and you don’t see the contradiction. So how does this play in to my shopping?

If I go into World Market, I walk past the seasonal bric-a-brac, around the toys, and through all of the candy to get to the coffee. Do I want sandlewood scented candles or Australian licorice? No, I do not. I don’t need that stuff, just Sumatran coffee at $10 for 24 ounces. Sure, I’m tempted by the beer and wine selection, but I generally have my eyes on the prize.

Get in, go past all of the non-grocery stuff, buy my java, and get out.

When I go into Trader Joe’s, I’m grocery shopping. I’m spending with a grocery mindset. And so, I don’t think about what I’m doing at Trader Joe’s the same way as I do at World Market. World Market is a home goods store with cheap coffee. Trader Joe’s is a grocery store with cheap wine. They aren’t the same experience, so I don’t shop the same, even though it’s all the same money. I have fallen victim to mental accounting.

I go in to Trader Joe’s. I grab a cart, because I’m not going to carry a case of wine. Having a cart leads to a different mindset than strolling past throw pillows and greeting cards. Instead of going straight to what I need, I start following the pack of shoppers through the aisles.  Can I cook with that? Will that taste good? Will my five year old eat that? Does the price seem fair?

I’m applying different spending rules. They aren’t even the same rules I apply to grocery shopping, because I’m not coming back next week. There’s no “Let me wait and see if I still think I need it.” It’s “Let’s try something new!” Somehow, Trader Joe’s combines my grocery rules with my entertainment rules, without keeping my budget for either in mind.

As they said on the old maps, “Here be Dragons.”

Changing Behavior

Hello, my name is Emily and I have a Trader Joe’s problem.  I admit it, I spend too much when I go. Now what am I going to do about it?

I have some choices.

  • I can try just buying the wine again, but that has never worked in the past.
  • I can send my husband to buy wine, and hope he doesn’t fall victim to the siren call of salted almonds and Gruyere.
  • I can avoid going entirely, avoid temptation and buy wine elsewhere. I’ll spend more per bottle, but it might be better wine.
  • I can go once in a blue moon, get my cheap vino, but work Trader Joe’s purchases into my grocery budget by cutting back other grocery purchases to pay for it.

So, change nothing and hope my behavior will change. Delegate. Avoid (and possibly pay more to compensate). Work it out.

How do I change my behavior enough to go to Trader Joe’s without wrecking my budget? I’m going to try cash..

The current plan for Trader Joe’s is to work it into the budget, take the cash saved from grocery trips, and limit my purchases to the cash I’m taking. It’s a different approach that seems worth trying so I can continue to enjoy cheap wine and specialty foods without losing my commitment to mindful spending. If I’m going to keep going to TJs, I can’t fill up my cart without working the entire budget. I can’t let Trader Joe’s seductive offerings continue to lead my budget astray. I can’t keep doing the same thing.

Do you think it will work?

Do you find yourself applying arbitrary rules to money? Are there places where you find yourself forgetting to spend mindfully? What do you do to keep away from mental accounting?

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and She Picks Up Pennies*

4 Responses to “Mental Accounting and the Danger of Trader Joe’s”
  1. Mel @ brokeGIRLrich 10/04/2015
    • Emily Jividen 10/04/2015
  2. RAnn 10/04/2015
    • Emily Jividen 10/05/2015

Leave a Reply

CommentLuv badge