How to Deal With the Emotional Side of Money Spending


By John Loff / Posted: Jun 10, 2019 / 0 Comments / Posted in Finance and Psychology

How to Deal With the Habit of Spending too Much?

Many people struggle to get a grip on their finances. But in today’s uncertain economic times, you can’t risk being part of the 54% of US adults who don’t have savings to see them through unforeseen circumstances.

Will you survive financially if something happens? Chances are you’re part of the 55% of consumers that live paycheck to paycheck.

What if it can be easier to take back control of your budget? Here’s our suggestion: Understand the emotional side of money spending.

Why Do People Over Spend?

When you know WHY you make decisions you regret, it’s easier to change WHAT you do. So, let’s start digging!

The Human Nature

And guess what. What you buy has nothing to do with why you’re buying it. Your state of mind determines what you do with your resources. Your values drive your decisions and actions.

If you value feeling better more than you care about saving money this month, you’ll easily commit to a purchase.

The Nature of Human Emotions

In general, there are more than 27 different emotions that can affect us. They fluctuate all the time, and they’re difficult to control. So you may think emotional shopping is inevitable. That’s not true.

Any of these emotions can spark a notion to shop, much stronger than your commitment to your budget guidelines:

  • Guilt: You feel obligated to keep sales representatives happy. You can’t say no to them and then purchase items you don’t need.
  • Competition: You need to show people around you that you can afford the best.
  • Highs and Lows: When you feel low, purchasing something makes you feel happy. For some consumers, the sense of accomplishment of finding a lucrative sale prompts them to spend more than you should. You may even revert to shopping simply because you feel bored.

Is There a Way Out? Yes! You can Manage it Better

The reason why self-help books stay popular is that they do work if you put your mind to it. The following steps require dedication and hard work. But they’re worth putting in the effort if you want financial freedom.

1. Analyze Yourself

Above, we mentioned various reasons why people tend to overspend or buy on impulse. You need to analyze your emotions to discover the root of your problem. What triggers your spending? Monitor yourself over a few weeks by making notes in a diary:

  • Write down how you felt before you started shopping.
  • What were you doing before you bought something?
  • What emotions surfaced after the purchase?
  • Who did you interact with before placing an order?

Recurring patterns will help you identify what you’re trying to escape or which positive emotions you’re trying to recreate.

2. Find a Solution That is Suitable for You

Different motivations will require different solutions:

  • If you’re buying to prove something you should work at improving your self-confidence
  • Buying because you’re depressed may need some counseling
  • Can you see how important it is to understand yourself to find an effective solution?
Remember
A challenging but dynamic process can help you regain control; of your emotions and your money.

3. Learn Better Habits

Some solutions—such as seeing a therapist—may only bring results over time. That doesn’t mean you should keep shopping as you do at the moment. Implementing healthier habits can help you save money, even if you’re still struggling with your emotions.

When you keep making better decisions, you’ll build new neural pathways in your brain. This will make it easier to make the right decisions.

Healthy habits include:

  • Getting a new hobby, so you don’t get bored
  • Not going to the store when you’re feeling down
  • When you live in denial about your financial situation, you don’t realize when you’re overspending. Draw up a budget, so you know how much you have to spend each month
  • Waiting 24 hours before committing to any purchase above a certain amount; time does wonders in revealing the motivation behind a shopping spree and letting overwhelming emotions dissipate.
  • Never carrying a credit card with you.
  • Deleting your profiles on eCommerce stores, so shopping isn’t effortless anymore.
  • Finding support. It’s not easy to keep to a new set of rules. For this reason, an accountability partner is essential to change your habits. Draw up your budget with the help of someone close to you, and report to him or her each month.

Don’t follow these steps out of guilt; find motivation in imagining the freedom you’ll experience. Your budget doesn’t have to be at the mercy of our emotions. Imagine smiling in satisfaction because you don’t count the days until the next paycheck anymore.

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