We can all be prone to emotionally charged spending from time to time – perhaps without even realising it. However, if we regularly make impulsive spending decisions based on how we’re feeling, it can have a big impact on our financial health, and subsequently our long-term mental wellbeing. Understanding the emotions that are commonly associated with overspending can help us to notice the signs and stay in control of our money.
Stress
Lots of people use shopping as a coping mechanism when feeling particularly stressed. Immersing ourselves in the vast world of online retail can offer a temporary escape from negative emotions – but this short-lived relief can ultimately lead to unnecessary spending. Whatever you’re looking for, browsing the shops can almost feel like a way of temporarily avoiding the cause of your stress, instead of addressing the problem itself.
Naturally, stress can also cause us to spend money on the things we perceive will offer some temporary respite from our emotions, that we otherwise might not have bought: alcohol and fast food are two common examples. Stress-related spending is more prevalent amongst younger generations, with research showing that UK millennials are 27% more likely than the average impulse buyer to spend to cope with stress.
To prevent stress from promoting unhealthy spending habits, it can be helpful to try and identify the triggers that lead to this behaviour. For example, do you find yourself in need of some retail therapy after a particularly difficult week at work, or maybe after an argument with a loved one? Understanding what it is that generally causes you to stress spend can encourage you to focus on combating these issues, rather than relying on unhelpful financial habits to act as a temporary solution.
Fear of missing out
Another common reason behind emotional spending is the fear of missing out (FOMO). Every day, social media feeds are filled with ‘desirable’ aesthetics, whether it’s showing off a physical product or a lifestyle. This phenomenon has only become more prevalent with the rising prominence of online influencers who are paid to promote goods and services on a brand’s behalf. On a far smaller scale, it could simply be a case of seeing a friend or family member – or even a stranger – posting a picture of the latest fashion accessory or the in-vogue travel spot that’s enough to invoke FOMO.
For retailers, this emotional reaction presents an opportunity to generate more conversions from a wider target market. Targeted advertising can place the products and services that are most likely to appeal to our individual tastes and interests onto our social media feeds, often prompting us to spend money on things we don’t necessarily need. It’s also common for retailers to try and invoke a sense of urgency in their online customers, which can contribute to more impulsive spending decisions.
The best way to combat this type of spending is to set a monthly budget and stick to it. This will help you to view the bigger picture and encourage you to avoid impulsive purchases. In addition, lots of people will find it helpful to simply lower their consumption of social media as a means to manage their emotions and maintain more healthy financial habits.
Low mood
Buying something new – whether online or in-store – can give shoppers a quick dopamine hit, which is the mood-boosting hormone responsible for making us feel better. In fact, psychological research has determined that the ‘anticipation’ of window shopping can have a positive mood-altering impact on our brains, before even making a purchase.
On top of that, when struggling with persistent low mood, we may be more likely to neglect the healthy money habits that provide long-term stability. Losing the motivation to do simple things like checking statements or staying on top of bills could cause us to lose sight of our financial position and subsequently make spending decisions that aren’t in keeping with our financial obligations. One recent survey found that, during a period of poor mental health, 42% of people put off paying bills. This can see people enter into a vicious cycle, where money worries exacerbate mental health issues.
Avoid using spending as a coping mechanism when you’re sad by applying the 48-hour rule. Rather than buying something in the moment for a quick dopamine boost, come back to it in 48 hours to more accurately determine whether it’s something you really need. In addition, it’s always a good idea to prioritise investing in yourself and your own wellbeing rather than physical items. When you take the time to do something that supports your mental health – whether that’s picking up a new skill or signing up to a local club – you’ll be laying the foundations for a more stable relationship with money, and more importantly yourself. Remember to seek help from a mental health professional, such as a counsellor, if you’re struggling with persistent symptoms of low mood.