11/27/2013 07:41 pm ET Updated Jan 25, 2014

Spending and Borrowing on Black Friday and Cyber Monday

Holiday shoppers are about to experience Black Friday and Cyber Monday. Shoppers who avoid these two days can actually learn some useful lessons about spending and borrowing behavior from those out buying.

What are the main lessons? To answer this question, we need to understand who shops on these two special days.

Black Friday Crowds

Research advises us to expect large crowds the day after Thanksgiving, especially in the Northeast and the South. Even the unemployed will hit the malls, undeterred by being out of a job. Nationwide, one in four holiday shoppers will help retailers make it into the black on Black Friday. Half of these will just be starting their holiday shopping, so excitement will be in the air.

Research tells us that people who shop on Black Friday are different from people who shop on other holiday shopping days. Women outnumber men two-to-one, whereas on other days the numbers are close to even. Relative to holiday shoppers on other days, more of these women are between the ages of 18 and 45, have higher incomes, are college educated and are single. Fewer have children, which is important because so many schools are closed that day, and looking after children while doing serious shopping is a challenge: Perhaps this explains why people who choose to shop on this day dread holiday shopping more than other shoppers.

Psychology and Good Financial Behavior

Black Friday shoppers are more optimistic, more confident, and less anxious about their personal finances than are other holiday shoppers. They are also more disciplined both at saving money from their paychecks and monitoring their credit card balances. This is important: Black Friday shoppers are 12 percent more prone than others to carry balances of $3000 or more. Saving from income and monitoring credit card statements are good behavior patterns for managing spending and borrowing.

Black Friday shoppers are more prone to set budgets than others. And this helps them to dispel false expectations and face reality. Research shows that in early November, holiday shoppers generally set excessive spending targets. Many plan to spend at least $750 on their holiday purchases without realizing they are aiming too high. However, the Black Friday shoppers who do set budgets tend to scale back their planned purchases to between $250 and $750. Although many eventually overspend their budgets, they still manage to spend less than $750. Setting holiday budgets and staying close to target are good behavior patterns for managing spending and borrowing.

A disproportionate number of Black Friday shoppers have multiple credit cards, which augments their purchasing power. Notably, having multiple credit cards makes it easy to overspend. But on this day a disproportionate number of shoppers pay for some of their purchases with cash. For spendthrifts with credit cards, paying with cash is a good behavior pattern for managing spending and borrowing.

Cyber Monday

The Monday after Thanksgiving will induce 15 percent of holiday shoppers to try and get the most for their money from online purchases. The gender mix will be different than it was on Black Friday. Cyber Monday features equal numbers of men and women shoppers. Cyber Monday attracts bigger spenders, who are planning holiday purchases of at least $750. Quite a few actually plan to spend more than $1,500. Cyber Monday shoppers will pay for their purchases mostly with debit cards and credit cards. Like Black Friday shoppers, they too are more prone than others to carry credit card balances of $3000 or more. Large balances are fine, but of course only for consumers who manage their borrowing effectively. Research shows that successful Cyber Monday shoppers tend to exhibit the same positive financial behavior patterns as their successful Black Friday counterparts. There is good reason to expect that those who are comfortable making large purchases online are also comfortable managing their credit card debt online.

Tips for Better Financial Behavior

In a previous post, I provided tips for reducing holiday stress by effectively managing spending and borrowing. My tips include:

• Be disciplined about saving income and monitoring credit card balances.
• Set budgets and stay close to targets.
• Use debit cards and cash if credit cards make it too easy to overspend.

Successful shoppers on Black Friday and Cyber Monday exhibit these behaviors more frequently than other shoppers. Holiday purchases are a very important component of consumer spending. Now is the perfect time to follow the lead of the most successful shoppers.

Hersh Shefrin is a behavioral economist who holds the Mario L. Belotti Chair in the Department of Finance at Santa Clara University's Leavey School of Business.

He recently authored 'Born to Spend? How Nature and Nurture Impact Spending and Borrowing Habits.'

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