Top 5 Ways to Stop Emotional Spending
Sometimes we get into the bad habit of spending money not because we need something, or even want something. Sometimes we spend because spending on something, anything, makes us feel a little bit better. We don’t know why it makes our day better. It just feels like the right thing to do and it makes us a little happier. So, we do it.
The problem is that we find ourselves repeating this little habit. All of sudden, we’re surprised by how much we’ve spent. We may not even remember what we’ve bought, but our bank account does. We don’t know why we’ve done what we’ve done and we don’t know why we keep on doing it. What’s even worse, we don’t know how to get out of that little bad habit that’s become a big problem.
What Makes Us Spend
Vincent Van Gogh said, "…the little emotions are the great captains of our lives and we obey them without realizing it." Subtle emotions and feelings drive our behavior. They nudge us and maneuver us into certain actions. We drift toward whatever we feel will satisfy our emotional needs. A 2016 Harris Poll study sheds some light on the number one feeling that drives our comfort spending. It revealed that about half of Americans (49%) overspend due to emotional stress.
Dr. Megan McCoy, a Financial Therapy professor at Kansas State University, points out that those emotional stress triggers are typically different between women and men.
In her experience, women are more sensitive to relational stress such as conflict with loved ones, feelings of loneliness, feeling unwanted, or feeling unloved. Marketing messages targeted toward women often promote products that will help women regain that relational footing which women may feel that they’ve lost or don’t have. Buying the right lipstick, jeans, or shoes can help you gain the attention you deserve or make you more attractive to your spouse. Buying the right house, furniture, or décor will encourage your friends to spend time with you in your inviting and comfortable home. Buying the right experiences can heal relationships or build better ones.
Men, on the other hand, spend for comfort when they feel their self-confidence is under duress. Men who feel inadequate, disrespected, or unsuccessful, search for products that will prove to the outside world that they deserve other's respect. Buying the right car or truck will give you the power, speed, or strength you need to impress. Buy the right cologne, suit, or boots and your mate can’t help but hold onto your arm as you walk into a room. Buy the right video game or the right gym membership and you can prove to the world that you are a champion.
To a lesser extent, social or physical stress can steer us toward unnecessary spending. When the neighbor kids come knocking, we may feel guilty if we don’t buy a tin of popcorn, a candy bar, or a box of cookies for a fundraiser. When the infamous Jones’s flaunt their most recent big purchase on social media, we might feel pressure to make a similar purchase to maintain a certain status. We might want to celebrate a significant achievement that a family member or friend accomplished, and no expense is too great (until you see the bill). You may be so hungry that no matter what you see in the store (celery, ding-dongs, steak, or spam) it all looks good and you want it in your cart.
Curb Comfort Spending
Whether deep-seated unmet emotional needs drive your spending habits, or if you’re just hitting the drive-through again because you’re tired after work, there are five behaviors you can implement to curb your comfort spending.
- Budget – If you don’t already have a budget, this is the place to start. With a budget, you can decide ahead of time where you want to spend your money. After you actually spend your money, your budget allows you to see where your money went. As the writers of GI Joe pointed out in the mid-’80s, “Knowing is half the battle.” Over time, you gain insight into your comfort behaviors and you can learn when you should shut off your browser or avoid shopping to mitigate unnecessary purchases.
- 24-Hour Rule – It can be big purchases or little purchases, but if you sense (and I know that you do) when you’re about to make an impulse buy, simply take a picture of the thing you might want to buy and walk away. I know it’s not as fun or as satisfying as clicking “Buy Now” or putting it in your cart, but it’s more fulfilling than regretting the purchase by the end of the night. If you take a picture, walk away, and you still feel like you want to make the purchase the next day, you’ve at least given yourself time to think and make sure it’s something you really need or want and can responsibly purchase.
- Forget your Credit Card – Leave the credit card at home and don’t save the credit card in the browser. A 2001 study by MIT professors Prelec and Simester found that making a purchase with a credit card instead of cash increases spending by up to double. Paying with credit is not only easy and fast, but it also distances the pleasure of purchase from the pain of payment by a month or so. You may not have $100 bucks to spare today, but if you put it on the card, your future self should have saved enough money to make the purchase. At least that’s what we tell ourselves while we hand over the plastic.
- Become Accountable – Share your spending habits with your spouse, a trusted friend, or a mentor regularly. It’s been said that ‘the truth will set you free, but it may make you miserable first’. Set up regular meetings with someone whom you trust and show them your recorded budget and purchases. It’s not easy or fun to share your impulse buys, but accountability can give you the extra motivation to walk away from an unnecessary purchase.
- Find a Professional – Finally, if nothing else seems to work, you should seek professional help. Go to your local financial advisor and ask if they have experience or training in helping people overcome impulsive spending habits. If they can’t help you, they may refer you to either a Financial Advisor with an Accredited Financial Counselor (AFC) credential or an experienced Financial Therapist. Sometimes you have to take control and seek a professional’s help. You have to ask yourself what’s better – dealing with comfort spending for the rest of your life, or asking a professional to help you deal with it once and for all.
You Can Choose
Outside influences, inner emotions, and deep feelings can guide us and nudge us toward unnecessary spending. In the end, though, we are the ones that click “Order” and we are the ones that hand over the card. We have to decide to make the purchase. We are also the ones that can overcome habits and choose freedom from comfort spending. Eleanor Roosevelt said, “In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility.” We can decide one day at a time to change.
Remember, you can become financially confident and you can have a better investment experience.-Tim Bacus, EA