7 ways to control emotional spending
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Resisting the desire to overspend when an emotional trigger hits was hard enough during normal times. Adding a global pandemic into the mix has made it even more challenging to resist emotional spending.
With Americans hanging out more at home, many have been able to save more on discretionary expenses. But this prolonged stressful pandemic can lead to high emotional tolls. It’s important to watch for the emotional triggers that cause you to make hasty purchases and create a plan to handle these emotions responsibly.
What is emotional spending and what triggers it?
Although the term retail therapy may seem like a fun play on words, buying stuff can turn into a real emotional outlet for some spenders. Emotional spending can cause you to quickly spend more than your budget can sustain, with repercussions on your wallet.
When you encounter an emotional trigger, you may experience a series of reactions that lead you to making a purchase. You might be triggered to spend by a range of emotions but here are a few examples:
- Sadness. After a bad day, you decide to go shopping to make yourself feel better.
- Boredom. A boring morning at the office leads you to splurge on snacks to make the afternoon feel less deadening.
- Fear. A global pandemic sets in and you immediately stockpile pantry items that you won’t need for a while.
- Jealousy. While out shopping with friends, they brag about their latest purchases. That leads you to purchase an even better model of an item you don’t need.
Think about some of the examples of emotional spending in your own life. Personally, I’m guilty of emotional spending when I’m tired or overwhelmed. But everyone has their own triggers that lead to emotional spending.
Here’s how to keep emotional spending under control
If you want to get your emotional spending under control, the strategies below may help.
1. Identify your triggers
The best place to start is by identifying your triggers. In order to identify your personal triggers, Erin Papworth, a financial coach and founder of personal finance app Nav.it, recommends tracking your mood to identify triggers and emotions that cause you to spend without your overall financial wellness in mind.
“Over time, people start to identify habits and trends that equate to unwanted behavior,” Papworth says. “Self-awareness is the first step to any behavior change.”
With a better understanding of when you are prone to overspending, you can recognize the signs before you complete the transaction.
2. Avoid impulse buys
Impulse buys can happen at a moment’s notice. If you weren’t planning on buying the item before you arrived in the store, then it’s an impulse buy. These whimsical purchases can add up quickly.
To avoid the draining cost of impulse buys, take some time to think about your purchase.
“A great way to prevent impulse spending is to have a rule that you must wait a minimum of 24 hours before buying anything over a certain amount, such as $50 or $100,” says Marlene Schmidt, a money management coach at Insight Spending Planners.
The benefit of sleeping on it is that you’ll have a clear mind when you make the decision whether to proceed with the purchase.
“Often, you’ll change your mind and realize you didn’t need or want it anyway,” she says.
3. Mind the ads
We are bombarded by a variety of advertising mediums including the radio, the internet, billboards and television. Even your email inbox is likely filled with retailers advertising their latest sale.
With the persistent barrage of ads, it can be easy to fall into an emotional spending trap. You can avoid this temptation by minimizing your interaction with advertising where you can. For example, you could unsubscribe from retailers that regularly send ads to your inbox or take your name off snail mail lists.
By removing some ads from your life, you eliminate some of the temptations you face as an emotional spender.
4. Find other activities
When you try to refrain from emotional spending, determine what other activities will fill that emotional gap. For example, you might choose to meet up with friends for a free walk around the park instead of shopping at a mall. You’ll still enjoy the connection of catching up without the temptation to bring home whatever is on sale.
5. Make a budget
If you don’t already have a budget, then it is time to build one.
“A lot of overspenders aren’t using a budget to set parameters for their habits,” says Nishank Khanna, chief marketing officer of Clarify Capital, a service that provides financing to small businesses. “When you don’t track what you spend, or have goals in mind, it can be hard to feel in control of your financial situation.”
With a budget in mind, you’ll have a better idea of what you can afford to spend before you allow your emotions to take over.
6. Set money goals
Beyond setting up a budget, create money goals based on your values. The goals you build for your money can range from funding a vacation to building your retirement accounts. Since you are tying your emotions to future money goals, you might have an easier time holding off on an immediate emotional purchase.
Cameron Burskey, partner and managing director of retirement security at Cornerstone Financial Services, recommends posting these goals in places that you will often see, such as a phone lock screen or background or on a bathroom mirror. “There are a lot of places you could put your financial goals, as it is important to constantly remind yourself of them,” he says.
7. Avoid the comparison trap of social media
As you create your shopping plans, Sabrina Hamilton, creator of Finance Over Fifty, recommends limiting your time on social media.
“Social media can perpetuate the desire to keep up with the Joneses, and can trigger emotional spending,” Hamilton says.
Don’t let the triggers of social media push you beyond your comfortable spending levels.
Emotional spending can be a very real threat to your financial well-being. As you implement these action steps in your life, continue to be aware of the triggers that push you into overspending.