Emotional Spending: How to Control Your Impulses and Save Money

Emotional spending can have a significant impact on your finances. It's common to treat yourself to something sweet when you're feeling down, or celebrate achievements over dinner. However, these little "treats" can often be emotional spending in disguise. If you frequently find yourself feeling guilty for buying things you never use, you may be an emotional spender. In fact, a recent study found that over 49 percent of Americans have purchased products in an attempt to spark happiness, with 30 percent of them regretting it later. With the holidays coming up, it's important to be aware of the emotional triggers that can lead to impulsive spending and take control of your budget. In this article, we will explore what emotional spending is, common triggers, and provide practical tips to help you control your impulses and save money.

What Is Emotional Spending?

Emotional spending occurs when you buy something you may not need to ease your emotions. These emotions can range from stress and sadness to happiness and celebration. It's often categorized as impulse spending, where purchases are made in the heat of the moment without considering the long-term consequences. For example, going to the store for coffee creamer and ending up buying a new set of headphones. Emotional spending is a widespread phenomenon, with roughly half of consumers admitting to buying products to boost their mood. On average, each emotional purchase costs $114.32. If you make one emotional purchase a month, it would cost you $1371.81 each year. This not only affects your savings but also hinders potential future investment opportunities.

Five Common Emotional Spending Triggers

Emotional spending is often triggered by specific emotions. Understanding these triggers can help you identify and address your own emotional spending habits. Here are five common emotional spending triggers:

1. Jealousy: You Shop to Keep up With Your Peers

Jealousy can lead to the desire to keep up with others, which often manifests in impulsive shopping. When someone gets an item you've wanted for a while or think is fashionable, you may feel the need to purchase something similar to keep up with them. This can result in unnecessary and unplanned expenses. A healthier alternative to combat jealousy is practicing gratitude. Start each day by writing down five things you're grateful for. This exercise can shift your focus towards what you have rather than what you don't, reducing the urge to make unnecessary purchases.

2. Guilt: When You Fail, You Treat Yourself

Feelings of guilt can drive emotional spending as a way to seek comfort and temporary relief. When you feel like you've failed in some aspect of your life, such as not taking care of your body or missing a deadline, you may turn to shopping as a form of self-care. However, these "treats" can quickly add up and put a strain on your budget. Instead of indulging in emotional spending, focus on learning and improving. Identify the reasons behind your guilt and set achievable goals to work towards self-improvement. By addressing the underlying issues, you can break the cycle of emotional spending.

3. Fear: You're Nervous, So You Use Shopping as a Distraction

Fear is a common emotion that can lead to emotional spending. When facing challenging situations or feeling anxious, many people turn to shopping as a distraction. Browsing online shops or making impulsive purchases can provide a temporary escape from fear and anxiety. However, this behavior is not a sustainable solution and can worsen your financial situation. Instead of turning to shopping, find healthier ways to cope with fear and anxiety. Taking a walk or engaging in physical activity can help reduce stress and improve your mood. It's a simple and effective way to address your emotions without breaking the bank.

4. Sadness: You Buy New Things to Boost Your Mood

Sadness can often trigger emotional spending as a way to boost your mood. When you're feeling down, buying new items may provide a temporary sense of happiness. However, this happiness is short-lived, and the financial consequences can be long-lasting. Buying something new releases endorphins in the brain, which are often referred to as "happy hormones." But relying on shopping as a mood booster is not a sustainable solution. Instead, try engaging in activities that naturally increase endorphins, such as exercising. Physical activity has numerous health benefits and can help improve your mood in a more sustainable and budget-friendly way.

5. Achievement: You Reached a Goal, So You Reward Yourself (Too Big)

Reaching a goal is a cause for celebration, but it can also lead to emotional spending. When you achieve something significant, you may feel the urge to reward yourself extravagantly. While it's important to acknowledge and celebrate your accomplishments, it's equally important to do so within your means. Instead of splurging on expensive dinners or extravagant purchases, find alternative ways to treat yourself that align with your budget. Planning a special day off or increasing your savings can be equally rewarding and beneficial in the long run.

Six Ways to Control Emotional Spending

Now that you understand the common triggers of emotional spending, let's explore practical strategies to help you control your impulses and save money. By implementing these strategies, you can develop healthier spending habits and achieve your financial goals.

1. Figure Out Your Emotional Triggers

The first step in controlling emotional spending is to identify your triggers. Pay attention to your thoughts and emotions when you feel the urge to make impulsive purchases. Ask yourself why you're shopping and whether it aligns with your actual needs. By understanding your emotional triggers, you can develop a better awareness of your spending habits and take steps to address them.

2. Take a Step Back and Breathe

When you catch yourself emotionally shopping, it's essential to take a moment to pause and reflect. Take a deep breath, pour yourself a cup of tea, or engage in a calming activity. Mindfulness can help you become more aware of your actions and make conscious decisions instead of impulsive ones. Consider waiting for a week before making any significant purchases. This waiting period allows you to evaluate whether the purchase is truly necessary or just a result of emotional impulses.

3. Delete Shopping Apps and Email Newsletters

To reduce the temptation of impulse buying, remove any shopping apps from your phone and unsubscribe from email newsletters that promote excessive spending. By eliminating these triggers, you create a barrier between yourself and impulsive purchases. The extra effort required to access shopping platforms can often be enough to deter you from making unnecessary purchases.

4. Find and Test Other Coping Techniques

Instead of relying on shopping as a coping mechanism, explore alternative activities that bring you joy and comfort. Engage in hobbies or start a creative project that distracts you from emotional spending. Consider low-cost or free activities such as reading, painting, or exercising. By finding healthier ways to cope with your emotions, you can redirect your focus and reduce the urge to engage in impulsive spending.

5. Keep Your Credit Card at Home

One practical way to control emotional spending is by leaving your credit card at home when you know you'll be in situations that could tempt you to overspend. Instead, carry a predetermined amount of cash that you've budgeted for specific expenses. This way, you are limited to spending only the cash you have on hand, preventing impulse purchases. Celebrate your small wins by rewarding yourself with homemade treats or simple pleasures that don't strain your budget.

6. Have Weekly Money Meetings With Your Budget

Regularly reviewing your finances is crucial for maintaining control over your spending habits. Schedule a weekly money meeting with yourself to assess your expenses, track your progress towards financial goals, and identify areas where you may have overspent or underspent. Use budgeting tools like Mint to simplify the process and gain a clear understanding of your financial situation. Take notes on how you can improve your financial decisions and adjust your budget accordingly. By actively engaging with your finances, you can make informed choices and stay on track to achieve your financial goals.

Emotional spending can significantly impact your financial well-being. By understanding the common triggers and implementing strategies to control your impulses, you can develop healthier spending habits and save money. Remember to identify your emotional triggers, take a step back and breathe when the urge to spend arises, eliminate shopping temptations, explore alternative coping techniques, leave your credit card at home, and have regular money meetings with your budget. By taking control of your emotions and spending habits, you can protect your financial future and achieve your goals.

© CPA NM Duncan (Tactic Bookkeeping & Business Advisory Services.