Home > About us > Personal finance > What is emotional spending and how can you keep it in check?

What is emotional spending and how can you keep it in check?

Emotional spending is part of our everyday lives, especially with how easy it now is to shop online.

It happens to all of us. Whether you’ve had a bad day so you indulge in retail therapy or you’re having a great day and lose track of how much you’ve spent.

How can you tell if you’re spending emotionally or rationally, and how can you keep your impulses in check?

What is emotional spending?

Emotional spending is when we spend money in moments of high emotion, without taking the time to really think about it and weigh up if it’s a good idea or not.

Everybody is prone to emotional spending, whether we do it because of positive or negative emotions. Thanks to how fast and easy it’s become to shop online in recent years, especially during the Coronavirus pandemic, there’s also been a rise in “boredom shopping”.

What causes emotional spending?

Emotional spending can come from simple, spur-of-the-moment joy or from feeling like we’re lacking something and trying to fill that gap.

This can have deep psychological roots. Shopping often offers a sense of control – even when it gets out of control.

Emotional spending, and especially impulse buying, can come from a feeling of dissatisfaction or unhappiness with your life and the idea that buying something will improve it.

Marketing relies heavily on this feeling to get us to buy things we don’t really need.

Especially now, in the age of social media, we are surrounded by pictures and stories of people who have lifestyles we wish we had. These images often come with the message that a particular product could change your life.

There’s been a lot of research into the science of why we’re prone to impulse buying, especially when it comes to online shopping and the anticipation of getting something in the post.

How can you control emotional spending and impulse buying?

There are a few ways you can try to keep impulsive spending habits in check.

Make a budget and set goals

This is the core of what we call “rational spending”. The best place to start is putting together a realistic budget, so you know how much you can afford to spend on the things you enjoy without putting yourself into debt and while still growing your savings.

A good way to motivate yourself to stick to a budget is by giving yourself a long-term savings goal, such as saving for a house deposit, a car or another expensive item you’ve wanted for a long time.

Reminding yourself of that goal will often make you stop and think before making an impulse buy.

Train yourself to overcome your impulses

Impulses usually go away if you stop to think about them long enough.

Every time you feel like buying something, take the time to ask yourself the right questions, such as:

  • Why am I buying this?
  • How will this improve my life?
  • Does this fit into my budget?

You’ll find yourself stepping away from more purchases and you might even end up wondering why you even wanted that item in the first place!

Identify your triggers and plan some shopping substitutes

Try to spot what usually drives you to spend money impulsively. Do you shop as a way to cope when things go badly or is it your first option when you’re celebrating a good day?

Once you’ve worked out your triggers, you can then think about if there’s something else you could do that would give you the same positive emotions as that impulse buy.

It could be anything from exercise and meditation to painting or playing video games. Come up with a list of things you enjoy doing that you can turn to the next time you feel like hitting that “buy now” button.

Ask for help

Emotional spending is very common. If you’re having a hard time keeping it in check, speak to your friends and family about it. They’re likely to understand what you’re going through and be happy to help you in any way they can.

You could find that someone close to you also struggles with emotional spending and you can keep each other in check.

Why is emotional spending bad?

Emotional spending, sometimes called retail therapy, isn’t always bad. It can improve your mood or make a celebration more memorable.

But when we do too much of it, it can start to affect our both our short-term finances and our long-term goals.

When we indulge too much in impulsive spending habits, we can quickly make a dent in our finances that can be hard to recover from. This can lead to savings disappearing and even getting into debt, which is likely to override the positive emotions we might have felt from spending the money.

Emotional spending and long-term goals can work together

A little impulse buying is fine, we’re allowed to enjoy ourselves! Keeping emotional spending in check doesn’t mean getting rid of it completely.

There are ways to spend money on things we like in the moment while still prioritising the things we need to buy and our long-term savings goals.

You can buy yourself a treat now and then while still saving up for a holiday or your first home.

Life is all about balance, and finding a balance when it comes to managing your money can go a long way towards improving your quality of life.

Stocks and Shares ISA

With one, simple annual management charge of 1.1%, our Stocks and Shares ISA could be a good option if you're looking to invest over the long-term.

Lifetime ISA

If you want to save for your first home or for life after 60, our Lifetime ISA could help as you'll gain a 25% boost from the government on top of your savings, as well as any potential stocks and shares returns.

Our Stocks and Shares ISA and Lifetime ISA both invest in stocks and shares. This means they have good long-term growth potential, but the value of your investments could go down as well as up so you could end up with less money than you've put in.

Online shopping from sites via the internet concept : Color paper shopping bags and boxes in shopping carts on a laptop computer keyboard. Consumers always shop goods and things online via internet.

Emotional spending vs rational spending

When we spend money based on our emotions, we often end up spending money on something we want at that moment rather than on something we need.

Rational spending, on the other hand, is when we thoughtfully plan out our purchases and make a considered decision to spend money - whether that’s buying something you need or spending money in advance for a future event. When we make rational spending decisions, we usually do our research first and weigh up the pros and cons.

You may also be interested in:

Is it better to save or invest your money?

Money that’s saved grows by earning interest, whereas money invested increases (or decreases) depending on the value of stock market shares.

Tax on savings and investments: discover ways to save tax-free

How can you save and invest without having to pay tax on it?

What are the best places to live and work in the UK?

Discover the UK’s best places to live and work based on quality-of-life factors including value for money and work opportunities.

Five ways to maximise your savings

We all want to make the most of our money, but how can you make it work harder for you? Here's five ways to maximise your savings.