It's easy to assume that money problems are due to practical matters, such as a lack of income or an unexpected financial emergency, but that's not always the case.
There's often more at play below the surface when it comes to why we spend or save—and it's not just about logic or willpower. We might not even be aware that our financial decisions are often based on our emotions, experiences and values. For example, we may overspend because we're lonely or pinch pennies because we have a fear of scarcity due to our upbringing.
A 2020 financial survey by Self explored emotional spending, which they defined as spending on things you don't need or want due to feelings of stress or unhappiness. When survey respondents were asked if they emotionally spend, 77% admitted to doing it in some capacity. Nearly half said they buy things they don't need in an attempt to feel happier, while 43% browse shops for escapism. Nearly a third (30%) feel regret after making impulse purchases. The average amount respondents spent on impulsive emotional purchases was $114.
These findings emphasize how common it is for deeper emotional or mental causes to drive us to spend. It can take some extra work and self-awareness to become aware of and manage emotional spending, but here are some tools to help you on your path.
1. Delay Purchases
If you tend to overspend, making yourself wait before buying can cause the emotional impulse to fade. When you catch yourself about to splurge on something you don't need, pause and commit to delaying for a set amount of time. It could be 24 to 48 hours, or longer for higher price tags.
Adding a reminder in your phone's calendar app with a photo or description of the item can give you the chance to re-evaluate a purchase a few days or weeks later. If it still seems like a good idea after the delay, and you can afford it, you can purchase it knowing you thought it over first.
2. Keep a Gratitude Journal
People often spend money to boost their mood or to feel like they are keeping up with peers. If you find yourself doing the same, consider keeping a gratitude journal as an antidote. Rather than focus on what you don't have, regularly think about what you do have and are grateful for to help shift your perspective. If you don't want to write things down, you could take a quiet moment each day to close your eyes and mentally list what you're thankful for.
Practicing gratitude has been shown to boost one's mood, so this technique is worth a try to see if you can get the same happy brain chemicals you get from impulse shopping but without spending a dime.
3. Remove Digital Temptations
You know that dieting tactic of not keeping junk food in the house? A similar strategy can be applied by removing temptations that encourage emotional and impulse spending. This might mean deleting shopping or food delivery apps from your digital devices that make it convenient to spend, or unsubscribing from retailers' email newsletters. These moves don't get at the root cause of emotional spending, but they can help reduce temptations.
4. Incentivize Budgeting
Those prone to emotional spending may find it especially difficult to create or stick to a budget. However, budgeting helps you live within your means by accounting for how much money you have coming in and going out each month. It can feel restrictive at first, but there are some tricks to make it more appealing and workable.
Similar to how you can gamify debt payoff, do the same with budgeting, building in incentives as you hit goals. For example, if you make no major impulse purchases in a month or quarter, you get a set amount—say $100—to spend on anything you want. Knowing you get that bonus without guilt can make it easier to stay on track. Or if you keep your debt under a certain amount, you treat yourself with a low-cost incentive.
Another way to incentivize budgeting is to build in a weekly or monthly adult allowance so you have room for spending but with guardrails. There are also accountability apps to make budgeting feel more doable.
5. Work With a Financial Therapist
If you need additional support exploring your emotional relationship with money and changing behaviors, consider hiring a financial therapist. These professionals have a unique combination of psychological and financial training, which can help clients uncover the root causes of money issues.
A financial therapist can not only help you develop awareness of why you interact with money the way you do, but create a healthier relationship and habits with it. This can especially be helpful if you struggle with gambling or debt due to impulse spending. To get started, search the online directory of professionals from the Financial Therapy Association.
The Bottom Line
Emotional spending not only has the potential to bust budgets, but it can land you in debt and risk affecting your credit health. Using some of the tools we just covered can help you get to the root of your financial issues and start making positive changes. Healthier spending habits can also benefit your credit, so along the way, check your credit report and credit score for free on Experian to track your progress.