Many people tend to disregard the consequences of emotional spending. Some of them don't even know they already developed this, which can really affect their daily lives.
For those who are not familiar with this negative habit, emotional spending is using money in response to emotional triggers instead of rational needs.
This means that your spending is driven by your emotions instead of practical thinking. With the worsening global inflation, emotional spending can negatively affect you and your family.
Emotional Spending: Almost 70% of Americans Guilty of It
CNBC reported that almost 70% of Americans admitted they have emotional spending habits. This was revealed by a survey conducted by LendingTree, an online lending market in North Carolina.
Brand Klontz, a certified financial planner said that American consumers are at a disadvantage when it comes to emotional spending.
"We're up against expert marketers who present buying opportunities for us that are entirely based on emotion," said Klontz, who is also a financial psychologist.
"In order to not spend that money right now and save it for the future ... you have to have an emotionally compelling reason to do it," he explained.
If you are among those who are taking their emotional spending lightly, then you need to know its consequences. Psychology Today provided some of them, such as the following:
- Your financial life will be impaired, leading to more debts, bad credit scores, depleting savings, and even bankruptcy.
- Since finances are important when it comes to relationships-married or not-emotional spending can lead to serious conflicts between you and your partner.
- Your emotional spending can lead to severe hoarding behaviors or disorders.
- If you purchase things based on your emotions, you will have a hard time storing and managing all the things you accumulate, which can cause you stress.
- Emotional spending can even trigger anxiety, depression, eating disorders, and substance use disorders.
How To Overcome Emotional Spending
Emotional spenders can do something about their negative financial habits. If you are one of them, here are some tips you can rely on to overcome your emotional spending behavior:
- Always use cash when shopping outside instead of credit cards as this will limit your spending.
- Before you shop online, make sure to wait 24 hours before buying it (24-hour rule).
- Ask your friend or other people when making spending decisions.
- Always remember your long-term financial goals whenever your emotions trigger another shopping spree.
- Before buying anything, ask yourself difficult questions. You can even write them down on a piece of paper or your desktop's notes as a reminder.
