What is Emotional Spending?
What is Emotional Spending and How the Heck Can You Curb it?
The term emotional spending can be difficult to define, as it can have a different meaning for everyone.
Some think of it as spending when you are stressed out, unhappy, or even bored. But that's not necessarily the case.
Grocery shopping on an empty stomach can be a form of emotional spending. That emotion would be hunger.
Sure, "your eyes might be bigger than your belly", but your emotional state was the main motivating factor behind your grocery shopping spree.
Some people also spend based on fear. That toilet paper craze we had back in 2020 during the coronavirus pandemic, that was a very prolific case of widespread emotional spending.
Especially since, most people don't technically need toilet paper to survive. Although, some might say that's debatable...
Some also spend emotionally based on discounts and bargains. While others simply enjoy the "high" of buying stuff they don't actually need.
Ultimately, it is defined as spending that is based on your "emotions".
Meaning, you make purchases based on your current emotional state. It's a really impulsive habit — like anything else in life.
Emotional spending has become much more pronounced during the pandemic and has led many into debt in years after. So much so, that it's actually begun to wreak havoc on the finances of many Americans and motivated them to get help with credit card debt.
How Can You Tell if You Have an Emotional Spending Problem?
Well, the best indicator is if, after you've actually made a purchase, you try to use logic to justify your purchase afterwards.
While these justifications can make it seem like the purchase wasn't a big deal, one thing is for sure, when you are spending based on emotions, you are often buying things you simply do not need.
This can be most apparent if someone asks "why did you buy this?". You might feel a little defensive afterwards but if you get asked that a lot, it's probably not without good reason.
Another gauge: If someone says you buy a lot of "knickknacks", "doodads", "tchotchkes", "trinkets", or "whatnots".
I'll be honest. I don't actually know what all these terms mean, but I do know they are most synonymous with the term "junk".
A lot of times, our family and friends are the best gauge here. If you hear comments from your family members, without having to ask... You may have an emotional spending problem.
And sure, that family member or friend asking you might be a little annoying and nosey but their heart is in the right place.
Since emotional spending varies, so do triggers. Some experience regular triggers that result in people needing to “fight” impulses to spend, and others deal with more periodic triggers that come and go.
Ultimately, these triggers come down to the emotional state a particular individual is in. If you had a really good day, you might reward yourself with a nice meal or new outfit. If you had a bad day, you might do the same to cheer yourself up. The same goes for bigger purchases.
It is common to want to splurge a little when celebrating a special occasion, or if you feel like you had a bad day or a bad week. Most people can think of a time where they spent a little over their budget on a nice date out or when they purchased a new outfit they didn’t really need, but they did it because it made them look and feel great.
The problem that comes from emotional spending is that it can cause you to lose track of your budget and financial goals.
When you are needing to justify (again, people always try to use logic after bad spending decisions) why you are spending money on things you didn’t actually plan on purchasing, or realize that you regularly spend over your budget, you definitely have an emotional spending problem.
How Can You Curb Emotional Spending?
Watch small purchases! They all add up. Don’t think big ticket purchases are the only kind of emotional spending that will break your bank. Small incremental and emotional purchases are actually the ones that can do the most harm. Spending $50 on Amazon each week might not seem so bad, but by the end of the year this will actually end up costing you $2,600.
When looking to control emotional spending, the absolute first thing you should do is create a clear budget for yourself. Allow yourself to still be able to spend on unplanned purchases, but know that there needs to be a "hard limit". A good way to stick to this is by creating a separate savings account for yourself and labeling it for e.g.: “fun spending.” This account will be used for purchases off of your Amazon Wishlist and your late-night trips to Target when you’re bored.
It's also not a bad idea to make use of the tracking features offered by your banking app. If your not a fan of this option, you can also download a money management app and use it to track all spending. Our company has also created a debt relief calculator tool that shows how much you could potentially save with our debt relief program. Nonetheless, when your monthly summary shows you’ve spent $90 on junk food at the gas station, you’ll KNOW it's time to make a change. Tracking your spending will help you see the impact all purchases make in your finances, as well as allow you to stick to a solid budget.
If you take the following action, emotional spending can be a thing of the past. And you can leave the knickknacks where they belong... in the past.