The UK’s current financial climate is somewhat difficult to navigate, with higher prices all around and people’s pounds stretching that little bit less far than they used to.
As more of us start to batten down the hatches with regard to our personal finances, we are forced to reckon with the daily financial habits we fall into, including a phenomenon that not many of us recognise immediately: emotional spending. We have all been guilty of emotional spending at one point or another.
But what exactly causes it, and how can we avoid it?
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What Causes Emotional Spending?
Emotional spending describes the purchasing activity we exhibit in an effort to control or appease stronger feelings. You might find yourself feeling a little upset, and resolving to buy yourself a chocolate bar to cheer yourself up. You might be bored, and inclined to buy yourself a video game or new gadget as a form of distraction.
While our disposable income is ours to do with as we choose, and while recreational spending remains popular across generations, emotional spending can eat heavily into our available funds – something with real-terms impacts in the current cost-of-living crisis.
Of course, it’s always nice to treat or reward ourselves with a luxury item, or a spur-of-the-moment meal out, however, it’s important to recognise the difference between rational and irrational spending.
Individuals who engage in emotional spending often use shopping or spending money as a coping mechanism and to seek a temporary sense of pleasure, comfort, or control in order to feel better at that moment and continued acts of such behaviour can lead to financial difficulties, debts, and even feelings of guilt or regret.
Understanding the difference between impulse buying and emotional spending
Impulse buying and emotional spending are similar in that they both involve making purchases without much forethought or planning but there are some key differences between the two which are important to be aware of.
Impulse buying refers to purchasing on a whim without much thought or consideration and is often triggered by seeing an item that you find attractive or buying a limited-time offer or discount. Impulse buying can happen to anyone regardless of their emotional state and can be fuelled by factors like curiosity or excitement.
On the other hand, emotional spending is driven by specific emotional needs or desires such as the need for comfort, validation, or distraction. Emotional spending is often used as a coping mechanism to deal with negative feelings such as stress anxiety or loneliness and is not necessarily triggered by the product itself but by the emotions and thoughts that the purchase is expected to address.
What follow, then, are some simple and actionable routes to mitigating and even avoiding emotional spending altogether.
Avoiding Emotional Spending
Using Savings Accounts
Savings accounts are crucial provisions for limiting your emotional spending. In placing your money somewhere safe, where it can grow unencumbered by your habits, you are less likely to spend it immediately.
Not only can establishing a savings account help you to curb your habits of impulse spending – you can create a habit of setting aside a portion of your income each month to save for future needs, such as an emergency fund, a down payment on a house, or a vacation, providing you with an incentive and a sense of value in saving your money.
With relatively easy-access savings accounts, you can use them as repositories for money and only withdraw what you need; if you really don’t trust yourself, additional funds could instead be ‘locked’ in a limited access account.
Ultimately, Having savings in place can help reduce the temptation to engage in emotional spending because you have a clear understanding of what you can afford to spend and what you need to save. By having money saved up for specific purposes, you are less likely to feel like you need to spend money impulsively to feel better at the moment
Tracking Spending
Saving your money alone isn’t enough to address your spending, though. You also need to know what you’re spending money on, to understand how your emotional spending takes shape each week. By noting down your expenditures on a week-by-week basis, you can discover patterns and work to dismantle them.
Tracking your daily spending can heighten your awareness of how often you’re spending and where your money is going. Increased awareness of your spending habits can then help you to identify any patterns of emotional spending such as regular emotionally charged impulsive buys.
Finance tracking can also benefit your budgeting techniques, helping you to design and stick to financial goals as well as prioritise your spending. This also comes hand in hand with raising awareness of self-accountability for your financial goals by noticing when you may be spending money on things that don’t align with your priorities or values.
New Coping Mechanisms
Emotional spending is, essentially, a coping mechanism. It is designed to appease negative emotions in the short term, even though it might inspire worse feelings in the long term – at least concerning your finances.
As such, you might be able to replace emotional spending with another form of coping, to help you manage your feelings without getting your wallet out too.
Traditional self-help techniques are proven to help many individuals who seek solitude in bad habits. Popular, successful coping strategies can include:
- Exercise: The rush of excitement one may get from emotional purchasing can be replaced through the release of endorphins produced during a workout. Exercise has also proven to be a great stress reliever and is an affordable or even a free hobby that can be brought into your lifestyle.
- Meditation: Meditation has been known for centuries as an effective way of managing stress and anxiety through finding peace and perspective within the present moment. By focusing your attention on your breath or a specific object, you can calm your mind and reduce negative thoughts and emotions.
- Creativity: Engaging in creative outlets such as painting, drawing, writing, music making, dancing, etc. are excellent methods of either channelling or expressing your emotions. Similarly to exercise, such activities can provide increased serotonin levels that emotional spenders often crave through acts of emotional buying.
In Conclusion
Emotional spending is by no means a pathological compulsion. It is something that all of us have experienced in one form or another, whether in the supermarket or online. Emotional spending is also difficult to address, simply for being near-unrecognisable amongst other spending patterns.
But catching on to the way your feelings play into your spending can have dramatic impacts on your future financial security – and any attempts to realise movements against emotional spending should absolutely be cause for celebration.
