Are you an emotional spender?

However good you are at managing your money, your emotions can urge you to make financial decisions that could cost you a small fortune. 

Emotional spending occurs when we spend more money on something because we feel bored, lonely, worried or perhaps because we feel like celebrating a life event like getting a new job. 

Unless you are a cold-hearted machine, keeping your emotions in check when considering your spending decisions is impossible. However, the good news is there are numerous ways you can take advantage of to ensure they don’t inhibit you in accomplishing your long-term financial goals, like getting on the property ladder, saving for retirement, or clearing existing debt levels.

Considering this whopping amount, MoneyHub has examined the different emotions that can impact your buying decisions, how to recognise your triggers and some of the methods you can use to manage them.

Emotions that can affect your spending 

Several different emotions can make you overspend. The important ones are, although not an exclusive list:

• Loneliness – many turn to shopping when they suffer loneliness or sadness to cheer themselves up. 
• Boredom – often leads to impulse purchases, with many browsing online websites or hitting the high street to entertain themselves by spending money.
• Stress – if we feel anxious or particularly worried about something, buying a purchase aids us in feeling better because we feel like we are in control of an aspect of our lives. Sadly, overspending often leads to more stress caused. 
• Jealousy – envy is one of the worst feelings that spurs us to spend when we don’t need something. Envy over our friends and peers having some new clothes, accessories, or holidays will urge us to compete and attempt to do the same, or worse, spend more to seem even ‘better.’  
• Happiness – Positive emotions also trigger us to spend when we have a reason to be happy as a reward for obtaining that happiness.  
• Excitement – All new things are exciting, including booking a holiday, tickets to a gig, a new handbag, or a tech gadget. This feeling of excitement compels us to spend. 

Emotional spending and its impact

While emotional spending will provide you with an instant sense of gratification, thus making you feel positive at that precise moment, the long-term outcomes can be dire, mainly if you’re relying on credit to fund your purchases.

Emotional spending is very similar to emotional eating. We are all acutely aware that cakes, chocolate, and crisps are bad for our diets, yet we still eat them regardless because they provide the immediate comfort we are craving. However, overeating will increase body weight, making it harder to shift the pounds and kilos later.

Similarly, overspending is precisely the same. If you frequently over-spend because you let your emotions improve, repaying what you owe will take a long time. 

Even if you have not used your credit cards to pay for the purchases, it does not matter. Spending all of your disposable income each month will eat away at any financial goals you seek to achieve – clearing existing debt, saving for a deposit for a first-time buy, or that summer holiday.

Identify what triggers your spending

To combat emotional spending, you must determine the triggers that cause you to spend. 

Carefully consider all the times you have overspent recently. Did this occur after a life event like a pay rise or a job loss? Did you embark on a spending spree to celebrate or commiserate? 

Alternatively, did you see your friend’s new jacket on social media, namely Instagram, then felt envious and decided to go on a clothes shopping spree to compete? 

If you cannot locate what urges you to spend frivolously, attempt to record a simple ‘spending diary’ in which you note how much you spent and what and how you felt at that time.

Knowing your triggers and the feelings that produce them will help you avoid further emotional spending. 

Control your emotional spending

So, the next time you feel prompted to spend your disposable income, ask yourself the following five questions: 

• How do I feel?
• Why am I buying this?
• Do I actually need it? 
• Can it wait for another time? (If it can, then maybe you don’t actually need it)
• How will I pay for it? 

If you can pause for a moment and answer these questions, they will aid you in establishing whether you really must purchase something or whether it is only an impulse purchase. 

It is also worth noting other ways to react to your emotions rather than spending. For example, exercise instead of heading to your wallet if you are feeling particularly stressed. Getting out and being active is a wonderful way to relieve stress and in the process, stop you from spending money you probably do not have.

Another good distraction is reading – keep a good book to hand and reach for it whenever you feel compelled to spend. If reading is not your cup of tea, consider another hobby to distract you. 

Moreover, if you’re still struggling, talk to a trusted friend and call them whenever you feel tempted. Having someone you trust politely remind you of the impact of splashing out can have on your monthly budget is often a welcome shock you need to jolt you back into reality.

Final thoughts on emotional spending

Awareness of what triggers your emotional spending and how you can distance yourself from acting on it can make a massive difference in how you feel about managing your money.

Rather than letting your spending urges control you, you can empower yourself to use your money wisely and achieve the financial goals you have set for yourself, no matter what they are. 

How do you control emotional spending?

Do you have any tips to share with the MoneyHub community?

Let me know below.