When people hear the term emotional spending, they often think of spending that happens from those impulsive buys. Those quick, unplanned purchases like grabbing a $5 coffee, adding something to your online cart that is on sale for $10, or even buying something random in Target simply because it looked cute. But the reality is that emotional spending goes much deeper than that. It isn’t just about how fast you are spending money, but also why you are spending.
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What is emotional spending?
Emotional spending, at its very core, is spending that happens when your emotions, your feelings, are calling the shots. This means that your spending isn’t being driven by your actual needs, or even your budget!
Emotional spending could look like:
- Buying something to cope with a stressful day
- Online shopping to feel connected, or to distract yourself from feeling alone
- Spending to make up for guilt over something, like treating yourself or your kids to something after saying no all week
- Shopping when you’re bored and want that dopamine hit
- Splurging to try to “prove” to yourself & others that you’re okay financially, especially if you aren’t
Emotional spending can be planned or unplanned. That’s what sets emotional spending apart from impulsive spending.
Planned, Emotional Spending
Yep, emotional spending can be planned. We’ve all been there. Let’s say you’ve had a tough week. So you’ve planned to do a big self-care shopping spree. You’re justifying this by telling yourself, “I deserve this”. Maybe you even set a budget for it.
But is it spending that was planned? Yes
Is it spending that’s emotionally driven? Also yes.
Emotional spending doesn’t mean it’s bad. It just means that our feelings in the moment are in control, and not the view of our long-term finances.
How Do Emotions Affect Our Spending Choices
Most people think that budgets and personal finance management are just math. But the truth is, it’s not. It can be incredibly emotional!
Morgan Housel, author of The Psychology Of Money*, writes:
Money is everywhere, it affects all of us, and confuses most of us. […] It is guided by people’s behaviors. And how I behave might make sense to me, but look [different] to you. p6
How we view and manage our finances is tied to our security, identity, social status, amount of freedom, and even our self-worth! This is why effectively managing our money isn’t just about calculations and spreadsheets. It is also about our mindset.
Why Does Managing Emotions Matter within Our Budgets?
When we understand how we feel about money, we can change our financial story.
By recognizing how your emotions are connected to your finances, you can:
- Begin to break the cycle of self-sabotage
- Recognize your spending triggers, like stress or guilt, before they affect your decisions
- Create money habits that move you in the direction you want to go
- Replace emotional reactions with intentional financial decisions
- Learn to be kinder to yourself as you manage your finances
- Build a financial routine that helps empower you, rather than overwhelm you
Learning to track what you spent, but also how you felt when you were spending the money, helps you build self-awareness, and that’s the first step to real change in your financial story.
How Can Certain Emotions Affect Our Finances?
There are various ways that emotions can take over how we spend money. Here are 6 ways that your emotions are controlling your financial decisions.
1: Spending To Cope With Uncomfortable Emotions
Does this sound familiar? You’ve had a bad day at work, and so you treat yourself to takeout or something online. It feels good in the moment, but later, you begin to regret the expense and start to worry about your budget.
Many people use spending as a way to cope with uncomfortable feelings and emotions, like stress, anxiety, sadness, or boredom. While this type of spending may feel good in the moment, it does lead to guilt, buyer’s remorse, as well as deeper financial strain down the road.
2: Being Afraid To Review Your Finances
Do you avoid opening bills and checking your bank account because you’re afraid of what you’ll see? This leads to you missing due dates, losing track of what you are spending, and potentially to late and overdraft fees.
Anyone who has struggled with money, including debt and financial trauma, may be hesitant or afraid when it comes to checking in on their accounts or even thinking about their finances. Fear around managing your money can easily turn into avoidance, which often causes more problems later on.
3: Fear & Over-Restricting
Fear not only affects your finances in avoidance, but also in over-restricting when it comes to spending on anything, or even hoarding things without a plan in place. The most common example of this mindset is Depression-era thinking.
This mindset around your money can protect you in the short term, but it also makes it very hard to enjoy your life, invest money, or take necessary risks like moving or changing jobs.
4: Spending To Avoid Shame & Guilt
When you are ashamed about your finances, there is a quiet voice that says “I should be further along than I am,” or “I’m just bad with money.” This thinking keeps you stuck in the past, which prevents you from taking action right now.
However, guilt often follows emotional spending and financial mistakes, which often creates a cycle that is very hard to break.
Shame surrounding your finances shuts down you’re ability to learn and grow; these are two things that are vital to improving your financial health.
5: Splurging Out Of Pure Excitement
Not every type of emotional spending comes from negative emotions. When you’re excited or feeling like you’ll miss out on something, it can push you to spend money impulsively, especially in social settings. If you don’t set clear goals around how you’re spending and saving your money, your savings could be chipped away at, and your entire budget derailed.
6: Confident & In Control
Negative emotions aren’t the only emotions that control your financial story. When you’re confident and clear on your decisions, you are more likely to:
- stick to your budget
- say no to impulse buys
- save consistently
- feel at peace as you manage your money
Positive emotions help you feel capable and in control over your money; learning which emotions you are in control will help you understand more about your decisions to either spend or save money.
Want to learn how to change how you view money? Check out [How To Create A Positive Relationship With Your Money].
Want More Content Like This? Check Out?
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- 8 Reasons Setting Financial Goals Is Important
- Simple Saving Strategies No Matter Your Budgeting Level
Final Thoughts: Emotional Spending Isn’t Just About A Lack Of Control
If you still believe that spending emotionally is all about a lack of control, then you’re missing the deeper pattern. Justifying the expenses because they were planned and budgeted for doesn’t help you recognize what emotions of yours are driving your financial journey.
When you recognize your emotional spending triggers, your finances can be driven by your values and goals again, rather than by how you are feeling in the moment.
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