- Studies show that impulse buying has increased during the pandemic because consumers want more power in a situation that feels out of control.
- A recent poll shows most Americans are experiencing financial hardship as a result of inflation, which is a motivator to stop emotional spending.
- Learn three psychological strategies to decrease emotional spending and increase fiscal consciousness.
According to a new poll from Gallup, inflation is causing financial hardship for a majority of Americans. The rising cost of living and subsequent financial anxiety are enormous motivators to curb emotional spending.
Like it or not, your emotions often drive what you buy, when you buy it, and even what you are willing to spend. In my therapeutic practice, I’ve seen depression result in lost wages from low productivity and cost people their jobs. I’ve witnessed clients rack up debt during manic episodes before they were properly diagnosed and treated for bipolar disorder. A woman bought a horse, a car, and a boat in one weekend—none of which she could afford. She was mad at her husband, so it’s interesting that the purchases were all modes of transportation!
Just as you’re told not to go grocery shopping when you’re hungry to avoid impulsive purchases, the same applies to your mood. Your state of mental health can impact the way you spend money.
What Causes Impulse Buying?
A study reveals that the COVID-19 pandemic has increased impulse buying in consumers as it makes us feel like we have some power in a situation that seems out of our control. Another study shows that compulsive buying gradually increased during the first six months of the pandemic when the CARES Act (first stimulus package) was passed. Suddenly, consumers found themselves panic buying as they hoarded products like toilet paper due to a scarcity mindset.
But what else triggers those impulse purchases? Often, it’s a tempting opportunity like buy now, pay later programs, which encourages impulse buying. With programs like these, you get the instant gratification you might be craving. But when the bill arrives, those “feel good” emotions can turn into buyer’s remorse.
There are psychological reasons why emotions drive what you buy—such as regaining a sense of power and control. Impulsive shopping seems to put you back in the driver’s seat when something happens in your life that is beyond your control because you can control what you put in your shopping cart.
How to Stop Emotional Spending
Making financial decisions based on your emotions can have a lasting impact on your mental health and result in financial self-sabotage and overwhelming debt. With a bit of planning, you can reign in impulsive buying.
1. Consider a financial cleanse to promote fiscal consciousness.
If you want to reduce or eliminate emotional spending, consider a financial cleanse. Choose a spending ban anywhere from 7 to 21 days long. Doing so can increase your spending awareness and save some cash.
During your financial cleanse, do not use any credit cards, if possible, and do not go to malls or retail stores (including online). In addition, delete retail apps on your devices and do not purchase any restaurant food or coffee—make everything at home and pay for your groceries in cash. If you need to get a gift for a friend, consider making them something, regifting an item you haven’t used, or being honest with them about your cleanse. The period of abstinence from extra spending allows you to become more mindful about excess and develop healthy spending habits. It can be challenging, so consider doing it with a friend or accountability partner so you can help motivate each other and keep one another sober about your spending.
2. Create a relapse prevention plan.
Identify the people, places, and things that are triggers for you when it comes to impulse buying. Maybe it’s somebody you are trying to impress, being at the mall, the retail apps on your phone, or following influencers on social media.
When you encounter those types of triggers, have a support plan in place that works best for you. For example, you can call an accountability partner, your therapist, or your sponsor, go for a walk, or attend a 12-step meeting.
If you have a relapse, practice self-compassion, learn from it, and move onward and upward. It takes some time to change old patterns of emotional spending.
3. Apply mindfulness to finance.
Before you spend money, ask yourself:
- Is spending money on this item or service absolutely necessary? If not, can I afford it?
- Will this expense bring me closer or further away from my personal, professional, and financial goals?
- Does it feel aligned with my values?
- Do I feel clear about this purchase in my gut?
Try this approach for a week. At the end of the week, journal about anything you noticed, such as spending less money because you were more conscious of it. Keep a log of your spending for at least a week as well. Discuss with a friend or therapist and discuss what you noticed.
Fix Your Financial Mindset
There is a direct correlation between mental health and financial health. In our instant gratification society, it’s much easier to reach for a temporary pain reliever like “retail therapy” when our mental health is suffering. Instead, develop regular mindful spending habits where you question yourself before you spend the money. For more exercises and support, consider working through the program in my book, The Financial Mindset Fix: A Mental Fitness Program for an Abundant Life. When your emotions no longer drive what you buy, you will experience the relief of improved mental and financial health and resilience.