How to Recognize and Overcome Emotional Spending
Have you ever had a bad day and used retail therapy to cheer yourself up? Most people have. In fact, 39% of Americans identify as emotional spenders, or people who spend more to cope with life’s highs and lows, according to a study by Credit Karma. The numbers are even higher for Millennials at 52% and Gen Z at 58%.
Occasionally, treating yourself to celebrate or buying yourself something to make yourself feel better isn’t bad. But turning emotional spending into a habit can be detrimental to your budget. This is why it is important to learn to spot your tendencies for emotional spending and work to correct them. This article will help you learn how to recognize and overcome emotional spending.
What is Emotional Spending?
Before we look at how to recognize and overcome emotional spending, it’s important to be clear on what emotional spending is. Emotional spending is buying something you don’t need, and may not even want, to satisfy an emotional need.
Typically, the emotional need is a negative emotion like stress, grief, or loneliness. But emotional spending can also happen when you are rewarding yourself for something. Treating yourself, while not bad, can be emotional spending that can bust your budget. For some, even being bored can lead to emotional spending.
While everyone will spend out of emotion here and there, the problem comes when it grows into a habit. This is why it is important to learn how to recognize it. When you can identify it, you can make different choices to help yourself feel better while keeping on track with your financial goals.
Identifying Emotional Spending
The first step to overcoming your emotional spending is to identify it. Look back at your budget for the last few months. If you don’t use a budget to track your spending, that’s ok. Just review your bank and credit card statements. When looking over your spending, it’s important to review more than one month. This will give you a larger sample and will help you better identify your emotional spending. Look for purchases that weren’t planned or budgeted for. Make a note of the day, the purchase, and the amount.
Once you have a list of purchases to consider, compare your calendar to the date the purchases were made. See if something particularly emotional happened the day you made the purchases. Make a note of any emotions you might have been feeling or issues you were dealing with when you made your purchases.
Once you’ve identified the emotional spending, it’s important to see what the different purchases have in common. Look at the list of things that were going on or feelings you might have had when you made the purchases. Is there a pattern? Knowing that certain feelings or life events lead you to spend more money is helpful. It can also help you anticipate the desire to emotionally spend and be better prepared.
Overcoming Emotional Spending
Once you’ve identified the feelings that can lead to emotional spending, it’s important to work to overcome the impulse. Here are a few things that might help.
Make it a Budget Item
Sometimes, when coping with difficult feelings, you’re going to spend money. So instead of letting it ruin your budget, plan for it. Give yourself a small amount of money each month that can be used to satisfy your emotional spending. Keep the amount you give yourself in line with the rest of your budget and goals.
Having a set amount of money for this kind of spending can take the pressure off a bit. It can also help you think through your emotional spending. Once the money in this category is gone for the month, it’s gone. Knowing this can help you weigh the true cost and the benefits of your emotional spending.
Institute a Waiting Period
Another thing you can do to overcome emotional spending is to institute a waiting period for purchases over a certain dollar amount or in a particular spending category. Giving yourself a 24-hour waiting period before you make the purchase can give you time to move through the emotions. Once you’re feeling more in control, you can see if the purchase still seems necessary or if it was an in-the-moment decision. A waiting period can also give you time to see how a purchase might fit into your budget and life. This can help you be more intentional with your money.
Another thing that can help you overcome emotional spending is to remove temptation. If you’re stressed or bored, and it’s easy to spend money, chances are, you will! But if you make it harder to spend, it will be easier to stay on budget. Here are three ways to remove the temptation to spend.
Take Shopping Apps Off Your Phone
Delete the shopping apps from your phone. Yes, it’s true; even without the apps, you can still get online and make the purchase. But it’s an extra step, which may cause you to think more about the spending. Deleting the apps from your phone can also stop you from scrolling the apps when you’re bored or upset.
Unsubscribe from Mailing Lists
Another way you can remove temptation is to unsubscribe from mailing lists. It’s likely you receive several emails a day with offers to buy this or save money on that. And while these emails can alert you to sales and save you money on things you need, they can just as easily tempt you to spend money you don’t have. Unsubscribing can remove the temptation when you’re emotional.
Leave Your Credit Card Somewhere Safe at Home
It’s so much easier to pay for things these days. You can tap a card or pay with your phone, and you’re on your way. The issue is that these easier payment methods have a habit of disconnecting you from your money.
If you are working to recognize and overcome emotional spending, it’s best to keep a strong connection with your money. One way to do this is to leave your credit card somewhere safe at home. That way, when you’re out and about, you’re limited to the funds you have. If you’re struggling with emotional spending, removing your credit card from your wallet can help curb the impulse.
Find Alternative Outlets
When you identified your emotional spending, you also looked to see what patterns or trends you saw. Knowing the behavior that leads to emotional spending can also help you overcome it. You can instead find alternative outlets.
For example, if you find yourself spending money when you’re stressed, go for a walk or work out instead. If you find yourself buying things when you’re lonely, call a friend or family member for a chat when you feel the need to connect.
Substituting these different activities is helpful in two ways. First, it can keep you from spending too much.
Second, it can also help you deal with and resolve the feeling instead of just delaying it. When you make a purchase that is fueled by emotion, you gain temporary relief from the feeling. This is because, as research shows, right before you make the purchase, your brain releases a neurotransmitter called dopamine. Dopamine makes you feel better. And it also strengthens your desire to seek out activities, like more shopping, that release more dopamine.
Instead of shopping to change your emotions, finding alternatives can still give you the same good feelings while keeping you on budget. Other activities that can release dopamine include yoga, meditation, exercise, and playing with a pet.
Things to Watch Out For
Once you can recognize your emotional spending triggers and have strategies in place to deal with them, you should see less of an impact on your budget. But it is important to remember that everyone slips up sometimes. You’ll still want to keep an eye on your spending to be sure it’s on track.
It can also be helpful to have a list of alternatives to emotional spending that make you feel better. Keeping this list close by will allow you to look for alternatives in the moment so you don’t give in to unnecessary spending.
If you do find yourself slipping and engaging in emotional spending, first know that it’s ok! It doesn’t make you a failure. Just notice the spending and remind yourself what you can do next time instead. The more you work to curb your emotional spending, the easier it will get!