Spending Psychology: Are We All Just Toys R Us Kids?

How does a toy store closing create such a strong impulse to buy in a child?

My son came home from school a couple weeks ago with an urgent request: We must go to Toys R Us now before the store closes. He doesn’t understand why the retailer is going out of business or what a liquidation sale means — only that the toys will soon disappear.

I found his appeal strange at first, considering he’s never stepped foot in a Toys R Us and we don’t watch live TV with commercials. How did he find out about this in kindergarten?

The answer, of course, was exactly what I suspected: peer pressure. A classmate’s dad took him to Toys R Us to take advantage of the sale, and the boy came to school the next day with a pressing message for all his friends.

Listen to what my dad got me. You have to go there and buy toys while you still can.

Now my 6-year-old son can’t get over the idea that he’s missing out on something big. Every couple days, he asks when we can take a trip to Toys R Us.

Please, we have to go there before it closes.

The urgency of my son’s request to shop at Toys R Us got me thinking about the psychology of spending. It intrigues me that the closing of a toy store created such a strong impulse to buy in someone who has so little money and already owns so many toys. I wanted to understand his thinking to see what money lessons the mind of a kindergarten student offers the rest of us.

Here’s what I discovered from the Toys R Us daddy discussion: Sometimes we make spending decisions that lack rationale, but they make perfect sense to us in the moment. It’s only when we question assumptions and social norms about money and possessions that we make better financial decisions.

The Toys R Us Money Talk

I approached the Toys R Us conversation with curiosity rather than conviction. My goal was to better understand my son’s material desires, not tell him he’s wrong to want another toy. It was a no-judgment parenting moment.

The discussion went something like this:

Me: Why do you want to go to Toys R Us?
Son: Because the store is closing.
Me: What does that mean?
Son: It means it’s going out of business, Dad.
Me: Thanks. I know that. But why does that make you want to go there when you didn’t before?
Son: Because I want to get a toy before it closes.
Me: Do you think that’s the only place that has toys?
Son: No, but they have the BEST toys.
Me: How do you know that?
Son: I just thought of it.
Dad: So you’re worried that you won’t be able to buy the best toys before it’s too late?
Son: Yeah.

I don’t think my son could have articulated his argument if I hadn’t pulled it out of him. It sounded familiar, though.

He wants a new toy because he’s afraid to miss out on the chance to own the “best” of something, just like his friends.

His spending philosophy isn’t uncommon. In fact, my mom told me that all her co-workers ran out to Carson’s after work the day the department store announced its liquidation. So it’s not just kids. It’s cultural.

Too often, we make purchase decisions based on a combination of a scarcity mindset and a fear of missing out. These strong social influences convince us we need more things even when we don’t.

A Scarcity Mindset + FOMO = Bad Decisions

It’s fascinating that a 6-year-old boy wants something he hasn’t seen just because it might not be there tomorrow. This scarcity mindset, or the worldview that there’s only so much of something to go around, leads to poor spending decisions.

The term “scarcity mindset” usually refers to a hoarding mentality about money, but it can apply to possessions. When something is running out, whether it’s the Toys R Us inventory or an infomercial special item, we want it more. It’s a psychological trick aimed at getting us to buy now instead of making an intentional, informed purchase. It’s the justification for instant gratification.

When a scarcity mindset is the internal driver of poor financial decisions, “fear of missing out” is usually the external driver. Although FOMO refers these days to the anxiety caused by the fear of being left out of something seen on social media, the same logic poses a risk to wise spending decisions. In my son’s case, he fears missing out on something fun that his friends are already enjoying. Social media only magnifies FOMO, with 57 percent of Millennials admitting they have made unplanned purchases because of what they saw on their social feeds. I can’t wait for the teenage years.

These dual forces — a scarcity mindset and FOMO — won’t be going away anytime soon for my kids. If anything, they will only intensity as they get older and make bigger spending decisions. I’m grateful that the Toys R Us talk helped me identify them at an early age.

See the Motivations, Not the Moment

I’m not uniformly opposed to my children buying toys with their own money, especially if they get a good deal. I spent years of my childhood using allowance to buy comic books, and my adult spending habits  didn’t suffer. My kids will learn lessons about money from the good and bad decisions. In fact, mistakes can be the best teachers.

And we are just talking about a toy. I don’t want to make this into a bigger deal than necessary and turn the Toys R Us question into a sit-down lecture about personal finance. As a fellow blogger pointed out on Twitter, sometimes we need to let kids be kids, without looking for the bigger life lesson.

So, I’m not going to force my kids to sit through Frugality 101 and think long and hard about how they spend their piggy bank money. After all, this isn’t as important as the time I defined for my son what it means to be rich. Maybe we’ll go to Toys R Us, and maybe we won’t.

It turns out that discovering the why behind my son’s spending impulse was more valuable than offering an in-the-moment money lesson. Now that I understand how he views money and possessions, I can guide his thinking, not just his immediate decision-making. That’s a more powerful way to shape his philosophy of money than being overly restrictive and causing him to rebel.

Just as importantly, my son reminded me that we’re all susceptible to making poor financial decisions based on faulty logic. But if we step outside the moment and examine the real motivations behind our spending, we might see that sometimes we act like rich fools.

On the other hand, sometimes we just want a new toy. And a fire sale is the perfect time to buy.