The buying factors that affect our (emotional) purchase decisions are highly personal such as love, sentiment, envy, pride, entertainment, and vanity. We will talk more about this later.
In an emotional purchase, the real need does not necessarily come into play in the first place. The emotions come from external sources, like influencers, that create the desire to buy
Emotional spending occurs when you buy something you don’t need and, in some cases, don’t even really want, as a result of feeling stressed out, bored, under-appreciated, incompetent, and unhappy or any number of other emotions. In fact, we even spend emotionally when we’re happy. For instance, what did you buy yourself the last time you got a raise?
There’s nothing wrong with buying yourself nice things from time to time, as long as you can afford them and your finances are in order, but if you’re spending more than you’d like to on non-necessities or are struggling to find the cash to pay the bills or pay down your credit card debt, learning to recognize and curb your emotional spending can be an important tool. While avoiding emotional spending completely is probably not a realistic goal for most people, there are some steps you can take to decrease the damage it does to your wallet.
How to Manage It?
Purchasing something isn’t necessarily a bad thing. It’s fine to treat yourself to nice items now and then, as long as you stay within your budget.
Stop and consider if you’re spending more than you can afford on non-essential items and your credit card obligations are getting out of hand. Perhaps you could learn to understand your proclivity to spend based on emotions and work to eliminate this harmful habit.
While completely avoiding emotional spending may not be a realistic aim for many individuals, there are actions you can do to mitigate the financial damage it might cause.
Emotional Purchases Triggers
If you can understand what triggers these emotions, you can develop compelling marketing materials that will appeal to these triggers. We all have the same basic general mental triggers that move us to do things.
1. Pride
Let’s face it: we all want the admiration and appreciation of people. We want others to respect us and we feel proud of our social status, activities, and achievements. That is why we protect our dignity, image and standing in the society at all cost. Some people purchase high-priced luxury items to prove something to themselves and others. Interestingly, this is one of the strongest buying motives.
2. Leadership
This is the appeal to a person to be the very first ones to own or to try something. The marketing appeal targets the feeling of being a leader of the pack: “I was one of the first persons to have that kind of car, etc.”
3. Fashion or Imitation
Fashion or imitation as a motive is the cousin of the motive of pride. People try to copy or imitate other prominent people like movie stars, athletes, etc. so that other people can identify them as ‘similar’ to the person they are imitating. Imitation happens when a person becomes so impressed with the dress, style, appearance, and other personal aspects like speaking, walking, etc. of another person.
4. Fear
Some people buy things out of fear, most of them imaginary. This explains the wide variety of marketing messages that touch on this angle: to use fear to move people to buy. Examples of this are product advertising for vitamins, supplements, health & wellness products, security gadgets, and accessories.
5. Sadness
Some people may joke that shopping is their therapy, but there’s really seriousness to the statement. Buying things for yourself or for others can make us feel better and help us forget the blues, even for just a moment. But, it can create bigger problems such as additional credit card debts. This is entirely the opposite of delayed gratification, which is a sign of a high emotional quotient that enables a person to save money and build wealth.
6. Jealousy
Jealousy or envy is a strong feeling of showing fear or resentment towards other people due to their perceived superiority in a given field. The consumer can have the impression that another person is more intelligent, or wealthier, or more attractive, or healthier, or just better than him or her. This causes the consumer to purchase things to outdo the other person.
7. Trend-Setting
Consumers in some age levels always want to feel cool or trendy and up-to-date with what’s going on around them. Appealing to this emotion is common in marketing with callouts like: “Don’t miss what people are raving about!”
Steps to Reduce Emotional Spending
1. Know Your Emotional Spending Triggers
The first key to curbing retail therapy understands what drives you to spend. What moods or things will tempt you to make unplanned purchases? If you know your spending triggers, you can find ways to combat and/or avoid those spending temptations entirely.
2. Monitor Your Spending to Find “Emotional” Purchases
The only way to know about all your emotional spending habits is by tracking your daily spending. You easily track spending by holding on to all your receipts to audit later or by using apps or software to track your behavior. You might notice certain times of days or days of the week you’re more likely to spend on items you don’t need and also notice all the little purchases you didn’t really need (and can return to the store).
3. Use the 48-Hour Rule
One way to reduce emotional spending is by using the 48-hour rule. This is a simple but effective way to deal with spending temptations. Instead of dropping a specific “want” into your shopping basket, you write down the item’s name and price on a notepad.
Give yourself 48-hours to think about a specific purchase decision and its impact on your monthly budget. During the 48-hour period, ask yourself if you really need the item and if it’s really worth it to you. Most of the time, the 48-hour rule will help you be more objective with your buying decisions.
4. Remove Spending Apps from Your Phone
When spending temptations strike, it’s best to make it a challenge to make unplanned purchases. This can mean keeping your credit card in a frozen block of ice, removing shopping and coupon apps from your phone, or even unsubscribing to retailer emails that highlight great deals. You know what will trigger you to overspend, so making it more of a challenge to spend money will help you fight the emotional spending urge.
5. Reduce Retail Therapy by Sticking to a Budget
Many people have found budgeting to be a proven way to reduce overspending. You can use the envelope method to limit your spending in each category (e.g. food, insurance, gas, entertainment). Or you can stick to an overall monthly budget that will force you to save (and invest) a certain amount each month while spending on things you need and paying down debt. Budgeting is key to avoiding retail therapy.
6. Get Support from a Good Friend When Feeling Tempted to Spend
Do you have a good friend who can keep you accountable to your financial goals? Just having someone to talk with when feeling tempted to overspend (especially on days when feeling down) is key to making better financial decisions. Everyone needs a family member or trusted friend who can jump on a phone call or meet-up with when financial temptations strike.
7. Improve Your Mood by Window Shopping
The Journal of Consumer Psychology cited a study indicating that hypothetical shopping is also effective at improving mood which means window shopping or putting items you want in a wish list rather than a cart. Just make sure to leave your credit cards at home so you won’t buy anything when at stores.
8. Treat Yourself with Small Purchases
Create a “fun” budget that allows you to make purchases with freedom (and without regret). There’s nothing wrong with emotional spending if you have it part of your budget and keeping your overall financial goals on track. You only get in trouble when you put yourself into debt and lose control.
When Emotional Spending Is a Problem
If you have a habit of buying yourself a new dress or make-up when you’re stressed out, or if you have truly bought those red leather thigh-high boots, it’s not necessarily a cause for alarm.
A little emotional outlay might be beneficial to the soul. When it becomes a major coping method, however, it can have serious implications, such as spiralling debt. When people find themselves spending in ways that are inconsistent with their principles or their financial and time goals, it becomes a problem.
When emotional spending becomes an issue in their relationship with their spouses, it also draws my attention as a mental health therapist.