Whether it’s ordering a takeaway at the end of a stressful day — or buying the jumper that was winking at you from the end of the supermarket aisle — most of us allow our emotions to affect our spending from time to time.
So why not grab a warm drink, find a comfy spot on the sofa and allow Loqbox to help you understand more about emotional spending?
We’re here to answer questions like, “What is emotional spending?”, “How can emotions affect my spending habits?” and “How can I recognise when my emotions are affecting my spending?”.
How does money affect you emotionally?
Before asking yourself why emotions might affect your spending, it can be helpful to take some time to think about the way money affects you emotionally. From our careers to our relationships, money affects all sorts of things in life. So it’s important to recognise that money and emotions are deeply connected.
Money and emotions are deeply connected
When we feel like we have enough money to cover the basics — and enough to cover emergencies and the things we enjoy — money can help us to feel safe and secure. On the other hand, when money is tight, our emotions around money can be a little more complicated.
Our relationships with money can be affected by our money habits, and vice versa
The way we feel about money is often affected by our money habits. So when you’re feeling in control of your financial situation, you might find that you also feel more confident in other areas of your life. But — unfortunately — the opposite can also be true.
If you’re having a tough time financially, it can sometimes feel like your money is affecting your overall wellbeing. Money can make us feel really worried, uncomfortable, anxious, or even guilty. And those negative feelings can make our relationship with spending more complicated.
What is emotional spending?
When your emotions prompt you to buy, that’s called “emotional spending”
Emotional spending happens when we allow big emotions — both good and bad — to affect the way we choose to spend our money.
Most of us can admit that we’ve bought things we might not need — or even really want — from time to time. And buying something to treat yourself, or cheer yourself up, isn’t a bad thing when you do it now and then. (It’s actually pretty normal — and something we often do without thinking about it!)
But when emotional spending becomes a habit for us — or gets a little out of control — it can begin to affect our financial wellbeing. And that’s when it might be helpful to think about your relationship with money, and how your spending habits are affecting your emotions.
How emotions influence what we buy
A little dose of “retail therapy”
Many people use spending as a “quick fix” to make them feel a certain way. You might have heard emotional spending called other things, like “impulse spending”, “comfort buying” or even “retail therapy.” And those names for the habit are pretty revealing when you think about it.
Emotional spending can be something we do impulsively — without really thinking about it — or when we need a bit of comfort, or something to distract ourselves from the way we’re feeling. But why do we find spending so satisfying?
Buying things makes us feel good, in the moment
And that’s no big surprise! It’s actually been proven that the process of buying something releases dopamine (aka “the happy hormone”) into your brain. And that can feel really good. But — unfortunately — those feelings don’t always last. Especially if your spending begins to interfere with your budget.
Emotional spending can be a bit of a budget breaker
Emotional spending can be a bit of a budget breaker. When we associate spending with happiness, it’s easy to get into a cycle of spending. Some people might even find that they begin to spend to cope with financial pressures. And that can be a really difficult habit to break.
When emotional spending begins to affect your financial wellbeing
For most of us, using spending to manage our emotions isn’t a particularly sustainable habit. It can have negative consequences if you often find yourself dipping into your overdraft — or using credit cards — to cover those spur-of-the-moment purchases.
While 20% of Loqbox members surveyed said that spending money makes them feel happy, more explained that budget strain and debt made them feel sad.* We don’t want that for anyone. So keep reading for tips on how to recognise emotional spending, and how to get it under control if it’s becoming a problem for you.
*22% of Loqbox members surveyed said that debt made them feel sad and 37% said the same about budget strain.
How to recognise when your spending is driven by your emotions
If you’re trying to work on your emotional spending, it can be helpful to try to work out what emotions prompt you to spend. You could even write some thoughts in a journal.
You don’t need to have all the answers straight away. But taking some time to explore the idea of emotional spending can help you work out what leads you to impulse buy and help you to avoid it if it’s becoming a problem for you.
What causes you to spend emotionally?
One way of working out what causes you to spend emotionally is to take a look at your most recent bank statement. Were there any days when you spent significantly more — or less money — than usual? Do you remember what emotions might have sparked those big spends?
Spending can be driven by negative emotions
You might begin to notice patterns, like a bigger supermarket shop at the end of a stressful week, or spikes in borrowing in the lead-up to a big social event. While spending can be driven by negative emotions — such as boredom or a need to feel more in control — you might also notice that you spend more when you’re feeling happy too!
Celebrate good times, come on!
One form of emotional spending that many of us overlook — or just don’t recognise — is celebratory spending. Even in good times, we can feel tempted to overspend. Whether that’s on a new outfit or a round of drinks for your friends.
How to manage emotional spending
If you’re trying to manage your emotional spending, it can be difficult to know where to start. So here are some top tips to help you find the balance between treating yourself and letting your spending get out of control.
1. Reduce the temptation
These days, you don’t even have to leave your home to feel tempted to spend. There are seemingly endless opportunities to shop — whether that’s in person, through apps, online gaming or even social media.
So one of the most effective ways to cut back on your emotional spending is to make it harder to spend money. You could try:
- Removing your card details from online stores
- Unsubscribing from marketing emails
- Deleting some apps from your phone
- Telling yourself to wait 24 hours before deciding to buy
- Keeping your credit cards in a different place to your debit card, or freezing them via online banking.
The idea is to make the process of buying a little stickier, so that you have more time to think about your reason for making a purchase.
2. Find some cheaper self-care alternatives
If you notice yourself spending more on a certain thing when you need a little pick-me-up, you could try to find some more affordable alternatives.
Perhaps you could keep some of your favourite snacks in the freezer for nights when you don’t feel like cooking? Or if you find yourself spending a lot of money on new clothes, you could challenge yourself to upcycle the things you already own.
3. Create a “sinking fund” for emotional spending
A “sinking fund” is a pot of savings you set aside for a specific purchase — whether that’s for a holiday, or for an upcoming celebration like Christmas or a loved one’s birthday.
So why not make a budget for your emotional spending? Set aside an amount you can afford to spend each month when you’re feeling down, or when you want to celebrate. Future you will thank you!
4. Try to be more mindful about money
If you feel like your emotions are having a big impact on your spending, it might be helpful to take some time to be more mindful about money.
Set aside some time to have a deep dive into your relationship with money. You might find that having some financial goals to keep you motivated makes it easier to decide whether you want to spend your money today, or whether you might prefer to put it towards something else in future.
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