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Understanding Emotional Spending and How to Manage It

It’s easy to assume that money problems stem from practical issues like a lack of income or unexpected financial emergencies, but that’s not always the case. Often, our financial decisions are influenced by deeper emotional and psychological factors. At O1ne Mortgage, we understand that your spending habits may be driven by emotions, experiences, and values rather than just logic or willpower.

For instance, you might overspend because you’re feeling lonely or save excessively due to a fear of scarcity rooted in your upbringing. A 2020 financial survey by Self explored emotional spending, defined as spending on things you don’t need or want due to feelings of stress or unhappiness. The survey revealed that 77% of respondents admitted to emotional spending in some capacity. Nearly half said they buy things they don’t need to feel happier, while 43% browse shops for escapism. About 30% feel regret after making impulse purchases, with the average amount spent on impulsive emotional purchases being $114.

These findings highlight how common it is for deeper emotional or mental causes to drive our spending habits. It takes self-awareness and effort to manage emotional spending, but here are some tools to help you on your path:

1. Delay Purchases

If you tend to overspend, making yourself wait before buying can help the emotional impulse fade. When you catch yourself about to splurge on something unnecessary, pause and commit to delaying the purchase for a set amount of time, such as 24 to 48 hours. Adding a reminder in your phone’s calendar app with a photo or description of the item can give you the chance to re-evaluate the purchase later. If it still seems like a good idea after the delay and you can afford it, you can buy it knowing you thought it over first.

2. Keep a Gratitude Journal

People often spend money to boost their mood or to feel like they are keeping up with peers. If you find yourself doing the same, consider keeping a gratitude journal. Rather than focusing on what you don’t have, regularly think about what you do have and are grateful for to help shift your perspective. Practicing gratitude has been shown to boost one’s mood, so this technique is worth a try to see if you can get the same happy brain chemicals you get from impulse shopping but without spending a dime.

3. Remove Digital Temptations

Similar to the dieting tactic of not keeping junk food in the house, you can remove temptations that encourage emotional and impulse spending. This might mean deleting shopping or food delivery apps from your digital devices or unsubscribing from retailers’ email newsletters. These moves don’t address the root cause of emotional spending, but they can help reduce temptations.

4. Incentivize Budgeting

Those prone to emotional spending may find it difficult to create or stick to a budget. However, budgeting helps you live within your means by accounting for how much money you have coming in and going out each month. It can feel restrictive at first, but there are tricks to make it more appealing and workable. For example, if you make no major impulse purchases in a month or quarter, you get a set amount—say $100—to spend on anything you want. Knowing you get that bonus without guilt can make it easier to stay on track. Another way to incentivize budgeting is to build in a weekly or monthly allowance so you have room for spending but with guardrails.

5. Work With a Financial Therapist

If you need additional support exploring your emotional relationship with money and changing behaviors, consider hiring a financial therapist. These professionals have a unique combination of psychological and financial training, which can help clients uncover the root causes of money issues. A financial therapist can help you develop awareness of why you interact with money the way you do and create healthier habits. This can be especially helpful if you struggle with gambling or debt due to impulse spending.

The Bottom Line

Emotional spending not only has the potential to bust budgets, but it can also land you in debt and risk affecting your credit health. Using some of the tools we just covered can help you get to the root of your financial issues and start making positive changes. Healthier spending habits can also benefit your credit. Along the way, check your credit report and credit score to track your progress.

For any mortgage-related needs, feel free to call O1ne Mortgage at 213-732-3074. We’re here to help you achieve financial stability and success.

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