Emotional spending is when you go ahead and spend money without any prior planning. It is often triggered by emotions – such as when you are feeling down and depressed…. some people will retreat in their shell, others embark on a spot of “retail therapy”
Now retail therapy is all very well if you can afford it and have budgeted for it, but if you haven’t it does have the power to land you deep in debt
Now don’t get me wrong – this doesn’t mean you can’t buy anything fun, it just means you need to have a good handle on what you have left to spend after paying all your necessary bills and important outgoing
If emotional spending is a problem for you (think about the person who would go out and spend on shoes if they were feeling down) then here are a few tips which might help you.
- Pay close attention to the things you buy. Some people shop out of boredom. To avoid this, only shop when you really need something and keep a track of what you put in your basket
- Try not to overindulge in fantasies. It’s ok to want to impress a friend with an expensive dinner or wow everyone at work with a really nice new outfit, but don’t act these out because it can become costly
- Try to avoid “keeping up with the neighbors” if they have bought a nice new car or just had the drive resurfaced. Stick to your own plan and your own priorities.
- Beware of small purchases because they can quickly add up. You may feel less guilty about buying something that’s cheap, but then you may feel like it will be okay to buy more cheap things.
- If you treat yourself every now and then, you will be less likely to impulsively spend large amounts of money. Just plan ahead. If there was some new tech gadget you wanted to get, save for it. You’ll feel much better about it and it won’t mess up your financial security
- Acknowledge the feelings that make you want to spend more. If you notice the emotions that are making you feel the need to buy things, you might be less likely to act on them.
- Always keep your priorities in mind. There will be no shortage of bad days, but rather than seeing material things as a way to make you feel better, try focusing on your more important goals. If your goal is to get out of debt, then look at making senseless purchases as an obstacle in your way of achieving that goal. If you want to make a large purchase like buying a new car or paying extra on your mortgage, take the money you would normally spend frivolously and save it
- Stay away from temptation. Try to avoid going to the mall, shopping on eBay, or being drawn in by catalogs. All they want is to get your money and it’s so easy to overspend
- Adopt a “24 hour rule” for any major purchases You’ll know “in the cold light of day” t if you still really need that purchase
- There is a good chance that having made the purchase that you will feel guilty about making the purchase and try to justify it to yourself. Think about those feelings of guilt before buying and how the purchase actually makes you feel
- Discuss all your potential purchases with your partner or a friend. They will soon tell you if it is a sensible purchase or not
Everybody is different so if emotional spending is a problem for you think about distractions that will work for you. For instance you may read a book or watch a movie at home rather than going to the shops. Learn a technique so that if you are bored, or emotionally low, you put that techniques into action. Here are a few:
- Read a book
- Watch some TV
- Play a game
- Go for a run
- Phone a friend
All of the above cost very little and would be a welcome substitute to shopping.
If emotional spending is a problem for you I hope this article has helped you in some small way to recognize it and stop it