Spending money for necessities or luxuries is a part of life. Different people have different spending habits, some spend money only for necessities and some on luxuries. The emotional status of a person also determines the person’s spending habits. During Covid-19 there has been an increase in the emotional spending phenomenon.
Emotional spending was more observed during Covid-19 when online shopping was at peak and people were stressed out of anxiety. Spending during anxiety or emotional bursts works with women mostly where they spend a lot when they are not feeling well. The spending of an individual will be different from person to person. Some may spend more on food and some may spend on clothing. Different people have different spending attributes when their emotions are high.
Is Emotional spending an issue?
When you are under emotional stress and you want to treat yourself or buy something for yourself then the purchases that you make during this period will be high. The expenses will be a major concern and you will realize this after the cooling-off period. You may tend to buy things which you never wanted and which you will never use.
Emotional spending is sometimes good where you feel happy when you are spending but how much you spend and what you spend your money are the factors that you have to consider. Emotional spending may become problematic when you are not consistent with your spending.
If you are spending too much money during emotional imbalance then you will fall into a debt trap. Emotional spending starts when there is stress in life, issues in family relations or friends or at the workplace. Going shopping in this mood will ease the pressure and you get diverted.
You may plan your money to utilize for any other priorities in life but because of emotional spending, you may tend to lose all your money on unnecessary things. Just because of an emotion you may get carried away and go ahead to spend on shopping.
Causes for Emotional spending
Emotional spending can be caused because of emotions which may engage in spending and these emotions can be arisen due to the following behavioral changes in person such as
- Anxiety
- Isolation
- Jealousy
- Depressed mood
- Sad
- Low self-esteem
- Financial stress
- Boredom
Apart from these, any behavioral pattern where a person feels comfortable in going out for shopping can be emotional spending.
How to Stop emotional spending?
Sometimes emotional spending may go out of control and the person may realize this at the very last stage. You can take some steps to control the behavioral pattern and decrease your impulsive behavior for buying.
- Find out ways for coping with emotions
- Understand your requirements
- Make Budget
- Check your account balance
- Savings Habit
1. Find out ways for coping with emotions
When you are spending money with emotions you are getting into a positive feeling while spending your money on purchases. Feel-good factors are released to make you happy during the shopping process. But this is not a good move and also not a healthy way to get happy feelings. You have to find out ways for coping with emotions and divert yourself from shopping.
You can try out the following ways
- Call your friends or family members and have a conversation
- Go for a long walk
- Listen to your favorite music
- Play your favorite game
- Watch tv show
- Take a shower and feel fresh
2. Understand your requirements
Every person has different requirements and every individual plans their monthly expenses from the income they earn. Prioritize your requirements and plan your expenses. If any emotional situations arise and then you look for shopping then look back into your plan of expenses. How you allocated funds towards each expense then will help you to overcome that emotion of spending money.
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3. Make Budget
If you are suffering from extreme emotions about spending money then the best idea is to allocate funds towards emotional spending. Prepare an emotional spending budget where you can allocate funds towards the line item. This method will help you to stay within your budget boundary and avoid excessive spending. It is important to follow the budget and implement it according to your plan.
4. Check your account balance
After the introduction of online banking and payment through phone apps. It is very difficult to know the balance in your account unless you meticulously check your account balance. When you’re in the mood for emotional spending check your account balance if you have enough balance on hand. When you do this it can caution you on controlling your expenses and sometimes also avoid your emotional spending plans.
Click here for Steps to budget with irregular income
5. Savings Habit
Saving money can create a good feeling. If you save money you can see your money grow over a period of time and you will enjoy this feeling. This can give you self-confidence and emotional support to face any financial situation in life.
Cultivate the habit of saving money. The plan should be to first save your income and then spend your income. If you are planning to grow your savings then over a period of time you will be able to have good reserves.
Take away
Human emotions play a motivational role in spending money. People spend money getting excited seeing the offers and deals. Sometimes they buy products which they do not require. It is important to control emotional spending to avoid wastage of financial resources. First, save and then spend, even when you are in the mood of emotional spending it is important that you think of saving money. Look out for the best offers and deals when you are shopping with the aim of saving.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
