When defining emotional spending, I usually look for signs of spending money during a period of heightened emotions. This could be things like stress, loneliness, anxiety, boredom or sadness.
The end result of emotional spending usually sees people buying items they don’t really need or didn’t even want.
Even worse, chances are after a negative buying experience they may suffer from the painful feeling of buyer’s remorse.
Buyer’s remorse is when you get that sinking feeling of regret after making a purchase – perhaps you spent money you never really had (putting it on the credit card) or you bought things you couldn’t afford.
Some common emotional spending patterns are feelings of jealousy, guilt, fear, anxiety, sadness, or recognition and acceptance.
If you find yourself wandering around shopping centres or browsing on shopping apps instead of addressing more important situations in your life, your emotions may eventually get the better of you and your budget could soon be out of control.
Sometimes people spend money to look good, or to be perceived as good as the person next door. That’s what we call ‘keeping up with the Joneses’.
At the end of the day, it doesn’t make sense to put yourself through all the emotional and financial pain. The trick is to feel good about yourself no matter what your outer circumstances may seem like.
In fact, most people are so busy focusing on themselves they hardly notice what’s going on in your world anyway.
Human emotions can trigger us in different ways. Boredom can lead to drinking. Anxiety can lead to smoking or drugs. Loneliness can lead to alcohol and late nights out. The list goes on.
A key point to remember here is that buying things to make you feel good in the moment won’t necessarily make you feel better over the longer term.
Curious to know if you’re an emotional spender? There are some signs to look out for.
Become more aware of your spending
The first step to recognising if you’re an emotional spender is to observe your spending habits. Ask yourself these questions:
- Do you overspend on your credit cards?
- Do you spend money you haven’t really got?
- If you feel lonely or unloved does that make you want to buy something so you feel good?
- After a few drinks at night do you wake up and realise you have spent money online?
- Do you spend money when you feel stressed out?
For now, pay attention to the feelings that trigger the emotional spending behaviour.
Try this strategy next time you spend money
As an experiment, ask yourself these questions when you are about to spend money:
- What is the emotion I’m currently feeling?
- Why am I looking to buy this in the first place?
- Do I really need this?
- Will buying this now improve or decrease my current financial position?
Adjust your spending habits
There are two main ways to get ahead financially – you can either increase your income or reduce your spending.
When it comes to controlling your cashflow, I suggest paying yourself first. For instance, take a small portion of your income and set it aside in a separate account so you have a cash buffer for rainy days or unexpected expenses. This strategy instantly reduces financial pressure from your life.
To keep you motivated and stay on track, you must have a clear money goal and a clear vision of what you want your life to be in 6, 12, 24 or 36 months.
Start by developing a personal money goal so you can stay on track and avoid falling into the trap of making emotional purchases.
6 simple ways to take control of your emotional spending patterns
If you’ve identified as someone who is an emotional spender, don’t fret. Fortunately, there are things you can do to take back control. Try these six strategies:
1. Set a savings target
Set yourself a clear savings goal with a deadline date. A big money goal must motivate you to direct money towards your goal on a consistent basis so you can reach it by your due date.
2. Be accountable
Share your goals with a ‘money buddy’ by meeting or chatting weekly or monthly. This will encourage you to commit to your savings plan and stick to it. You can also keep each other accountable.
3. Try a diversion tactic
Wear a ‘lacka band’ on your wrist and whenever you are tempted to make an impulse purchase, flick the rubber band and snap the feeling. This is how I gave up smoking back in 1998 – it works!
4. Have a $200 limit rule
For any purchases over $200, stop, hit the lacka band on your wrist and wait 48 hours. Then ask yourself: “Do I really need this right now?” or “Will spending this money move me closer to my goals or further away?”
Instead of spending the money, turn your focus to your big savings goal.
5. Remove temptations
Unsubscribe yourself from any retailer shopping mailing lists you might be on. Also take yourself off any online store lists and apps, and unfollow people and brands on Instagram that are constantly trying to sell you something online.
6. Allow for the odd treat
You deserve to treat yourself at times so make sure you do. However, keep it within your budget so your savings strategy can stay on track. The occasional, low-cost treat might offer the incentive you need to keep smashing your big savings goal.
I’m not saying any of this is easy so take things one step at a time. Follow and apply these tips and you’ll keep more money in your accounts and have less financial stress in your life.
