Breaking the cycle of emotional spending

What is emotional spending?

Emotional spending refers to the act of making purchases based on how we feel rather than on what we actually need. Whether it’s buying a new outfit after a bad day or treating ourselves to something expensive to boost our mood, emotional spending often provides short-term relief but can lead to long-term financial challenges.

Why do we do it?

At its core, emotional spending is a way to cope with emotions like stress, anxiety, or even excitement. Shopping offers a temporary distraction from these feelings – a way of self-soothing which provides a quick boost of joy or relief. As we make purchases dopamine is released – giving us a quick emotional high – which reinforces the behaviour and encourages more spending to chase that high. This creates a cycle where we seek out shopping for comfort, even if it leads to regret or financial strain later on.

Where does emotional spending come from?

The roots of emotional spending are often tied to our emotional needs. From an early age, many of us are conditioned to associate spending with happiness or comfort. For instance, if we were rewarded with toys or treats as children for good behaviour or to ease our emotions, we may have learned to use shopping as a tool for emotional regulation later in life.

Additionally, the rise of consumer culture, especially with the advent of online shopping, has made it easier than ever to give in to emotional impulses. We’re constantly bombarded with advertising, promotions, and social media images that reinforce the idea that buying something new will make us feel better. This constant reinforcement can lead to habitual emotional spending.

How to break the cycle: a financial coach’s perspective

A financial coach will help you break the cycle of emotional spending by understanding the underlying triggers and developing healthier coping mechanisms. Here are some steps I work through with my clients:

1. Identify emotional triggers: Keep track of when you feel the urge to spend. Is it after a stressful day at work or when you feel lonely? Recognising these emotional triggers is the first step toward breaking the pattern.

2. Pause and reflect: When you feel the urge to make an emotional purchase, pause. Take a few deep breaths and ask yourself: Do I really need this? Will this purchase help me address my emotions, or am I using it to escape how I feel?

3. Create a budget and stick to it: Establishing a budget that aligns with your financial goals can help you resist impulsive purchases. Knowing you have a set amount for discretionary spending can help you make more intentional decisions about where your money goes.

4. Find alternative coping strategies: Instead of turning to shopping when you’re feeling emotional, find healthier ways to cope. Exercise, meditation, journaling, or even calling a friend can provide emotional relief without harming your finances.

5. Set financial goals: Focus on long-term financial goals that motivate you to make more conscious spending choices. Having clear objectives, like saving for a trip or building an emergency fund, can help shift your focus away from temporary emotional rewards to meaningful financial progress.

As a financial coach, my role is to help you understand these emotional patterns and provide strategies to change them. By acknowledging emotional spending and taking proactive steps to address it, you can regain control of your finances and build a healthier, more balanced relationship with money.

Dee O’Callaghan is a qualified Financial Coach and Team Lead at the Financial Wellbeing Collective. With over 25 years of experience in the financial services sector, including managerial roles, she has spent the last 6 years dedicated to the not-for-profit sector, helping individuals improve their financial wellbeing.