Emotional spending: How to stop and save
What's the story
Emotional spending can throw even the most well-planned budgets off track. It happens when emotions (not need) dictate what you buy. This can easily put a strain on your finances and make it difficult to save. Knowing common emotional spending traps and how to avoid them is essential to protect your finances. Spot these five traps, and you will be able to save money better.
Shopping trap
Retail therapy: Don't shopping when feeling stressed
Retail therapy is one of the most common emotional spending traps, where shopping is used to cope with stress or sadness. While it may provide a temporary relief, it often results in unnecessary purchases that strain your finances. To combat this, consider alternative stress-relief methods such as exercise or meditation that don't involve spending money.
Impulse action
Impulse buying: Think before you buy
Impulse buying refers to making purchases on a whim without prior planning or consideration of the budget. This behavior can quickly deplete the funds meant for savings or essential expenses. To curb impulse buying, set a waiting period before making non-essential purchases, create a shopping list before heading out, and stick to a budget.
Discounts/offers
Sales and discounts: Not always a bargain
Sales and discounts can lure you into buying something you don't need just because it is on sale. This trap leads to overspending in the name of saving money. To avoid falling into this trap, assess if the discounted item is actually necessary and if it fits in your budget before making the purchase.
Gifting needs
Emotional gifting: Spend within your limits
Emotional gifting involves overspending on gifts due to feelings of obligation or guilt rather than genuine intent or affordability. This practice can lead to financial strain during holidays or special occasions. Set clear gift budgets in advance and explore thoughtful yet affordable gift options that convey appreciation without breaking the bank.
Social culture
Social pressure: Stay true to the budget
Social pressure frequently compels people to spend beyond their means to stay in line with friends or societal expectations. This can cause you to fall into debt and prevent you from saving. Instead of giving in to outside pressures, focus on your personal financial goals by setting boundaries around social activities that require excessive spending.