Life is filled with swift transition. While many things remain the same, there are equal or more things that constantly change. With many demands on financial resources, at times it may seem difficult to prioritize competing obligations. Food, gas, and utilities are many of the constantly changing and often increasing financial demands on resources that seem to continuously diminish. An individual has so many financial obligations with a finite amount of money. If these financial challenges are unmanaged, emotional spending can become a reality.
Spending money in response to emotional triggers instead of rational needs is emotional spending. While many individuals are guilty of emotional spending at some point in their lives, it may significantly impact their finances in the long term. Retail therapy, or shopping, is often utilized as a term to disguise emotional spending. Purchases that stem from emotional choices and decisions often result in impulse buying of goods and services that may not be needed and are often unaffordable.
Emotional spending becomes problematic when the emotional and impulsive purchases become consistent and repetitive in nature. These financial challenges are further exacerbated by financial difficulties, increased stress, and undue strain on relationships with family, friends, lenders, and creditors. Moreover, impulsive buying and spending offer temporary satisfaction with long-term regret and remorse.
Overcoming emotional spending habits can be overcome. To reduce the temptation for retail therapy, remove the retailer notifications from mobile devices, laptops, and electronic messaging. Establish a Resource Allocation Plan (“RAP”) that summarizes available resources to be used for financial obligations and priorities. Eliminate or minimize credit card usage. This will lessen the urge to overspend. Implement a 96-hour rule that requires thinking about a desirable or wanted purchase for four (4) days. This will allow ample time to rationalize the need for the purchase and its affordability. Finally, it is always a great idea to seek help in the elimination and management of emotional buying and impulsive spending.
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Nicole Michelle
Finance and Money Wiz
December 22, 2021
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