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The Frugal Creditnista

How Emotional Spending Affects Your Debt

Hey hey hey, Prosperity Partners! We all know that feeling when a bad day leads to a shopping spree we can’t afford. When your heart takes control of your credit card, your bank account bottoms out. It’s called “emotional spending,” and it’s something 39% of shoppers say has put them in debt. 

When we’re stressed, lonely, or unhappy, buying something new can make us feel better, at least for a little while. It’s shiny, different, and exciting. But emotional spending can’t last. And you know what? You might just stress more about money in the long run, especially if you have to go into debt to get what you want.

In this blog, we’re diving deeper into:

  • What emotional spending is
  • What triggers us to buy on a feeling?
  • How to rethink spending to avoid more debt

What is Emotional Spending?

Emotional spending, retail therapy… same same. It’s when we let our emotions spend money. We’re filling our feelings with stuff.

It might work for a while. But sis, you’re putting a Band-Aid on a bullet wound. You start depending on retail therapy too much and you’ll go it every time you need a pick-me-up. 

And then you start feeling so bad for spending money you shouldn’t spend (that’s called buyer’s remorse, BTW), all that stress is gonna make you spend even more. 

People chase that dopamine they get when they spend money, and then they run out of money—and then they need to borrow money so they have money. 

READ ALSO: Understanding the Psychology Behind Your Debt

Emotional Triggers that Grow Your Debt

How Emotional Spending Affects Your Debt

It’s one thing to treat yourself now and then. But when your emotions are in the driver’s seat and your credit card is the car, it’s hard to break the pattern. You end up buying things you don’t need (and sometimes don’t really want), which can dent your finances. 

And while you might have money right now, you’re basically spending money that could be put to better use. For example, you might land in debt because of an unexpected medical bill, car repair, or appliance replacement because you blew your savings on stuff you don’t need.

When you buy based on your emotions, you’re usually doing so for one of these reasons:

  • Stress: Retail therapy gives you a fresh rush of dopamine and serotonin (pleasure chemicals in the brain), but don’t expect it to last. If you overspend, that stress might come back with a vengeance. 

  • Boredom: Feeling bored or restless begs entertainment, which means spending money (usually). Again, any warm fuzzy feelings you get from it are temporary and come with consequences.

  • FOMO: The fear of missing out could push you to spend money you don’t have. Who wants to pass up a sale, deal, or trip of a lifetime? But not wanting to feel left out can come at a steep cost if you have to go into debt to feel included.

  • Sadness: Hair, nails, new kicks, new clothes—there are plenty of ways to spend money to boost your self-worth. Buying something you want can help you feel happier, at least for a moment.

  • Loneliness: If you’re feeling lonely, buying something may give you some company. Again, it’s temporary

  • Peer Pressure: Social media, influencers, and even family and friends might “make you buy it” (thanks, TikTok). You might feel like you have to spend to fit in.

  • Happiness: Studies show we tend to spend more when we’re happy. We like to reward ourselves or celebrate milestones, such as promotions, birthdays, holidays, and the like.

Do you see a common theme here? Here's the catch: emotional spending feels good at the moment, but it can bite you in the butt later.

READ ALSO: Balancing Rational vs Emotional Thinking in Financial Decision Making

How to Rethink Spending with Your Brain, Not Your Heart

How Emotional Spending Affects Your Debt

You might be new to this idea of emotional spending. But you can rest assured that retailers know exactly what they’re doing. From restaurants to stores to car dealerships and more, they know how to make you spend more, even if you don't need anything

That’s why you need to know your emotional triggers and what causes you to open your wallet without fail. Once you know this, you can create strategies to let your brain do the spending, not the heart.

Let’s review some examples:

Track Your Spending and Look for Patterns

Seeing is believing, so start looking at how much money your emotions cost you. Review your purchases and think back to how you were feeling when you made them. Finding this link can help you spot when and how your emotions cost you money. Once you know this, you can start changing your behaviors.

Practice Mindful Spending

Retrain your brain to think about your feelings before whipping out your debit card. Considering how you’re feeling in the moment can help you see if you need it or just want it.

Find Alternative Activities

Spending money isn’t the only way to deal with emotions. Try finding other hobbies or activities to feed your feelings, such as working out, journaling, or socializing. These can give you a break from stress without dipping into your finances.

Final Thought: Get Help with Emotional Spending and Debt Reduction

Is your heart tugging too much at your wallet? Emotional spending can be a tough habit to break. But in my new Ditch the Debt workshop, we tackle effective ways to overcome debt accumulation and build smarter spending habits for life!

Join us at the Ditch the Debt workshop on February 10th, 2024, and start crushing your debt for good!

understanding the Psychology of Debt

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