Ever had a bad day and found yourself reaching for a pint of Ben & Jerry's and a big spoon? If so, you're familiar with the concept of emotional eating, but have you ever considered emotional spending?
Emotional spending is unplanned spending designed to give us a little pick-me-up or to make us feel more secure when we feel down. It's usually harmless, but if it becomes a habit it can cause problems.
What is emotional spending?
It's often triggered by negative life events, whether it's one bad day or a string of them. We’re bombarded by marketing messages designed to show that something shiny and new will makes us feel better or fix a problem that we didn't know we had, so it's not surprising that when bad things happen, we often instinctively reach for our wallets.
Here are some examples of emotional spending that you might recognize:
- It's payday, our bank accounts have been temporarily replenished, and everyone is going out for a drink to celebrate surviving until the end of the working month.
- Even booking a summer holiday after a particularly cold winter could be seen as emotional spending.
- At the more serious end of the scale, experiencing a layoff, a loss of a loved one, or the breakup of a romantic relationship can cause extremely distressing feelings that can lead people towards unhealthy spending habits.
Plan in advance and prepare other activities for when feelings arrive that cause problem-spending.
When do we do it?
As well as difficult life events, emotional spending can affect people who have a negative self-image. It can work as a comfort blanket, a way of making us feel better, if only temporarily.
Not all emotional spending is because of negative feelings. Emotional spending can also come after success. If you earn a raise at work, for instance, it's natural to feel you deserve a material reward.
Why do we do it?
Emotional spending is a reward or comfort mechanism. It's something we all do from time to time, and in most cases it's not a problem. It's an issue that we all need to acknowledge, and understand how to control for our own benefit. If it's a problem in your life, with a bit of work it can be overcome.
Spending is an emotional regulator, so people who shop when they feel down are spending money to regulate their emotions. There is an initial high, and then buyers' remorse can kick in if you're spending money you can't afford. The lows last longer than the highs but the highs grab you and you feel compelled to shop and spend because it's a shortcut to feeling good.
Five signs of emotional spending
It's vital to understand and recognize the signs of emotional spending, both in yourself and others. Do these five signs remind you of anyone?
- Buying multiple items and returning them. If you constantly overbuy at stores or online, that’s a sign you're making too many impulse purchases.
- Buying for instant gratification may make you feel better temporarily, but lasting contentment comes from other behavior. Buying material items is not the route to lasting happiness.
- Spending to help cope with financial pressures is a sure way to increase those pressures. If you spend money you can't afford you're just making the financial hole deeper.
- Buying items to keep up with others is a never-ending chase. Spending to impress your social group can damage both your self-worth and your finances.
- If you habitually shop any time you get bad news, it's a sign that you spending emotionally, and should acknowledge what you’re doing and take action to prevent it in the future.
What are the consequences?
Emotional spending can be more or less serious depending on your financial situation. If you're already in debt, then further unplanned spending could have serious implications. If you have a reasonable amount of disposable income, then an occasional emotional splurge might not be a problem, but it could be keeping you from meeting your longer-term financial goals.
What can you do to control it?
To maintain control of your finances, you need to budget and be disciplined -- emotional spending directly contradicts that.
Regular emotional spending can cause major problems. If you hide or lie about your spending, it can cause disagreements with your partner or family and lead to debt problems.
The easiest way to control it is to stop and think before buying something to ask yourself whether you really need it. Just try not buying that item and see if it actually affects you. 9 times out of 10 you'll get over the impulse and feel relieved that you haven't spent your money.
If you need help, consider using a financial coach to understand and tackle the underlying issues that cause emotional spending to become problem spending.