How Emotions Influence Your Spending Habits

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Understanding Emotional Spending: More Than Just Money Problems

It’s easy to assume that financial issues stem from practical matters like insufficient income or unexpected expenses, but that’s not always the case. Often, our spending and saving habits are influenced by deeper emotional, experiential, and value-based factors. For instance, we might overspend due to loneliness or save excessively because of a fear of scarcity rooted in our upbringing.

The Impact of Emotional Spending

A 2020 financial survey by Self explored the concept of emotional spending, defined as spending on unnecessary items due to stress or unhappiness. The survey revealed that 77% of respondents admitted to emotional spending in some form. Nearly half of them bought things they didn’t need to feel happier, while 43% shopped for escapism. About 30% felt regret after making impulse purchases, with the average amount spent on such purchases being $114.

Strategies to Manage Emotional Spending

Recognizing and managing emotional spending requires self-awareness and effort. Here are some effective tools to help you on your journey:

1. Delay Purchases

If you tend to overspend, try delaying your purchases. When you feel the urge to buy something unnecessary, pause and commit to waiting for a set period, such as 24 to 48 hours. Adding a reminder in your phone’s calendar app with a photo or description of the item can help you re-evaluate the purchase later. If it still seems like a good idea and you can afford it, you can proceed with confidence.

2. Keep a Gratitude Journal

People often spend money to boost their mood or keep up with peers. Instead, consider keeping a gratitude journal. Regularly reflecting on what you are grateful for can shift your perspective and boost your mood without spending money. If writing isn’t your style, take a quiet moment each day to mentally list what you’re thankful for.

3. Remove Digital Temptations

Just as dieters avoid keeping junk food at home, you can remove temptations that encourage emotional spending. Delete shopping or food delivery apps from your devices and unsubscribe from retailers’ email newsletters. While this doesn’t address the root cause of emotional spending, it can help reduce temptations.

4. Incentivize Budgeting

Creating and sticking to a budget can be challenging for those prone to emotional spending. However, budgeting helps you live within your means by tracking your income and expenses. To make budgeting more appealing, build in incentives. For example, reward yourself with a set amount to spend guilt-free if you avoid major impulse purchases for a month. Alternatively, set a weekly or monthly allowance for discretionary spending within your budget.

5. Work With a Financial Therapist

If you need additional support, consider hiring a financial therapist. These professionals combine psychological and financial training to help clients uncover the root causes of their money issues. A financial therapist can help you develop a healthier relationship with money and create better financial habits. To find a financial therapist, search the online directory of professionals from the Financial Therapy Association.

The Bottom Line

Emotional spending can disrupt budgets, lead to debt, and affect your credit health. By using the tools we’ve discussed, you can address the root causes of your financial issues and start making positive changes. Healthier spending habits can also benefit your credit. Along the way, check your credit report and score for free on Experian to track your progress.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you achieve your financial goals with expert guidance and support.

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