Emotional Spending: Recognize and Avoid It
Track your money and your moods.
We’ve all indulged in a little bit of retail therapy at some point or another, but if you find yourself routinely having a hard time trying to control your spending, or impulse buying to improve your mood, you might have an issue with emotional spending.
What is Emotional Spending?
Emotional spending is when you purchase a product or service in an attempt to ease (or avoid) negative feelings instead of to fulfill an actual want or need. If you feel the urge to spend money to feel good, and find yourself making questionable financial decisions as a result, then you may be an emotional spender.
How to Avoid Emotional Spending
Money and mental health are closely linked—spending money can temporarily soothe anxiety and depression…or contribute to feeling anxious, sad, guilty, or ashamed. Getting a handle on your emotional spending habits can help both your bank balance and your overall sense of well-being.
The biggest trick to help you avoid making emotional purchases? It’s all about building awareness of the moods and triggers that impact your spending.
Identifying Emotional Spending Triggers
Impulsive spending wouldn’t be called that if we planned for it, right? Right. And if solving this issue was as easy as recognizing that impulsive spending is a major budget buster, this article would only be seven words long. No—as with most things in life, figuring out why we spend money when we do can be complicated. (Especially when you don’t really want to know.)
So, start off by becoming more aware of when you’re most likely to buy stuff you later realize you don’t really need. Did you click on an ad on social media after scrolling through a dozen #BLESSED posts that had you feeling a little inadequate? Have things gotten serious with your local DoorDash driver after a recent break-up or stressful life phase?
When you find yourself hitting that “add to cart” button, pause to identify how you’re feeling and see if you can figure out why that purchase feels so important. Maybe taking a minute to think that through first will help the moment pass…and maybe it won’t. That’s okay too, but we’re still working to build awareness so here’s what happens when you do make that impulsive purchase anyway: you’re going to make a note of it.
Tracking Moods and Spending
Despite our best intentions, it’s easy to become the unreliable narrator of your own story. “I swear I didn’t spend that much,” you might insist. “I really don’t think my moods influence my spending too drastically.”
Okay, well, let’s find out.
If you’re already a YNAB user, this will be easy to do within the app itself as you record transactions! If not, use the “notes” section of your phone or a spreadsheet if you’re feeling fancy.
In YNAB, we’re going to add an emoji to the memo section that represents our mood every time we end up on the “Add Transaction” screen for an impulsive purchase. You can also jot down a quick note to explain why you’re feeling the way that you do, but it’s important to keep this process simple.
At the end of the month, you should have a pretty solid trail of clues that might prove that you do tend to overspend during emotional lows.
How to Avoid Emotional Spending
Once you realize that you’re an emotional spender, it’s time to put some safeguards in place to protect your bank account and your budget. Consider the following:
- Check your budget before you spend money. Technically, you should be doing this anyway (otherwise, you’re just expense tracking) but sometimes we need a little nudge to get back on track. No more money in your Dining Out category? Go make a sandwich.
- Set predetermined spending days. For example, you only make non-essential purchases on Tuesdays and Saturdays. Sometimes closing the browser tab and walking away is all it takes to lose interest.
- Create a Wish Farm or Celebration Fund category in your budget so that you have money earmarked for rewarding or indulging yourself.
- Unsubscribe from any newsletters or social media accounts that tempt your desire to make unplanned purchases.
It’s important to be realistic: you’re still going to want to buy nice things. Fine! Budgeting shouldn’t be restrictive or feel punitive. Just make sure you can afford that stuff first. Otherwise, your credit card bill might cause the next bout of emotional angst.
The Impact of Awareness
When you know your spending triggers and acknowledge that your moods cost you money, it becomes easier to avoid making emotional purchases.
Consequently, you’ll be able to save more money, reduce clutter, alleviate financial stress, find freedom to make more significant choices or purchases in your life, and ultimately, avoid buyer’s remorse over what was really a short-lived attempt at a temporary serotonin boost.
So, put those emojis to good use and find out which feelings influence your finances.
Interested in creating a budget to help you gain better control of your money (and emotions)? Try YNAB for free for 34 days!