We have all felt overwhelmed or stressed and then made an impulsive purchase to feel better. It might be new shoes, a device we don’t need, or takeout for the third time this week.
Have you ever thought about why we shop when our emotions are running high?
Emotional spending is a common problem for many individuals. It can quickly get worse, affecting our finances and mental health.
Interestingly, the latest report from The I Paper found that 66% of adults in the UK admit they usually indulge in emotional spending.
We, at Circadian Capital, help manage emotional spending and make better financial decisions if you want to take control of your finances.
Now, let’s take a closer look at emotional spending: why it happens, what triggers it, and some simple ways to stop it. Keep reading!
What is Emotional Spending?
Emotional spending refers to purchasing items to manage or cope with your emotions. People mostly buy items not because they need them but because they want to feel better at the moment. Emotions like stress, boredom, anxiety, or even happiness can lead us to buy things we don’t need or can’t afford.
In the UK, emotional spending is becoming more common, especially with the ease of online shopping. It’s easy to click “Buy Now” when you are feeling down. As a result, many people end up with items they truly don’t want.
Why Does Emotional Spending Happen?
Here are some reasons why emotional spending happens, and along with that, we will check out how to stop it:
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The Temporary Boost of Dopamine
Emotions have a big impact on how we shop. When we feel sad or anxious, buying something can give us a quick boost. This happens because shopping causes our brain to release dopamine, which makes us feel good and provides a sense of pleasure and satisfaction. Unfortunately, this good feeling doesn’t last long. When it fades, we might feel even worse than before.
Surprisingly, recent data from CMO Tech shows that 42% of shoppers purchase items to improve their mood at least once a month.
How to Stop It
To change your spending habits, take a moment to pause before making a purchase, especially when you are feeling intense emotions. Try to wait several hours or even a whole day. Usually, the urge to buy lessens as your emotions calm down.
Instead of shopping, find other ways to cope with your feelings. You could take a walk, write in a journal, or talk to a friend. Choosing healthier ways to manage your emotions can help you take control and focus on long-term solutions rather than quick fixes.
If you are looking for more insights on emotional spending like loss aversion and other influencing factors, just read this blog: “What is Behavioural Finance and How Can It Improve Your Spending Habits”.
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The Pressure of Consumer Culture
One reason people often spend money when they are emotional is the influence of our consumer culture. Ads and social media show people with the latest gadgets or trendy clothes everywhere. This pressure to keep up can lead us to spend money we do not have to feel better about ourselves.
In the UK, this is mostly made worse by the idea of “retail therapy” which suggests that buying things can lift your spirits.
How to Stop It
Be aware of the media you consume. Unfollow influencers or accounts that make you feel inadequate or push you to buy things you don’t need. Instead, focus on creating a feed that reflects your values and supports a healthy view of money.
It’s also vital to practice gratitude for what you already have. This can help you shift your focus away from material goods. Setting clear financial goals, such as saving for a major purchase or building an emergency fund, can keep you motivated and reduce the desire to buy unnecessary things.
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The Instant Gratification Factor
We live in a fast-paced world where people expect immediate results. If you want a new phone, you can order it online and get it the following day. If you’re bored or stressed, shopping can seem like a quick fix. The instant pleasure from buying something can be tempting when we feel we deserve a treat.
How to Stop It
To avoid the trap of instant gratification, start paying attention to your spending. Before buying something, ask yourself if it’s necessary or just a way to fill a temporary need. Try a “24-hour rule.” Wait a full day before making a purchase that catches your eye. This gives you time to consider whether the item is essential and if it matches with your long-term goals.
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Using Shopping as an Emotional Coping Mechanism
Many people shop as a way to cope with stress, sadness, or even frustration. Instead of facing the real reasons behind our feelings, we often shop to lift our moods temporarily. This habit is common in high-pressure situations, where buying something new can distract us from uncomfortable emotions and ease our worries.
In fact, UK millennials are 27% more likely than other impulse buyers to shop on a whim as a coping mechanism for stress. This demonstrates a trend among their generation of spending money when emotionally overwhelmed.
How to Stop It
To break this cycle, it is important to find better ways to cope with emotions. Instead of using your credit card, try experiencing your feelings directly. Talk to someone you trust, practice relaxation techniques, or take part in physical activities like yoga or walking.
By replacing shopping with healthier ways to manage your emotions, you can address your feelings more effectively without relying on spending as a form of support.
For more information on emotional spending and how feelings affect financial decisions, check out this article: “How emotions and mood influence financial behaviour.”
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Keeping Up with Trends and Social Expectations
We live in a society where trends change quickly, and social norms often affect what we buy. Keeping up with the latest fashion or technology can create a feeling of urgency to purchase, even if it doesn’t fit our needs and budget. This type of spending is usually driven by the fear of missing out or the desire to work on social experimentation.
How to Stop It
To avoid giving in to social pressures, remember that your worth isn’t based on what you own. Set clear priorities for how you spend your money and stick to them. Before buying trendy items, think about whether they truly improve your life.
One way to manage this is to create a “wish list” of things you want or need. This can help you figure out if you genuinely wish to do something or if you are just influenced by others.
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Lack of Awareness Around Financial Goals
Without clear financial goals, we often make impulsive purchases without considering the long-term consequences. Emotional buying is common when we don’t realise how our current decisions affect our future finances. Without a solid plan, it is hard to resist the temptation to spend when emotions take over.
How to Stop It
To tackle this, set clear and realistic goals. Create a plan that outlines how much you want to save and spend. This will help you understand your spending habits and make better decisions.
Having a financial goal, like saving for a vacation or building an emergency fund, makes it easier to resist buying things that don’t support your future plans.
Conclusion
Many people struggle with emotional spending, but it doesn’t have to control your life. You can take charge of your money by identifying your triggers and using practical steps to reduce emotional spending. It’s okay to treat yourself sometimes, but make sure you do it mindfully.