- With emotional intelligence, you can manage emotional spending and avoid the inevitable negative consequences.
- Advertisers and marketers leverage psychology to encourage consumers to purchase their products or services.
- Financial freedom happens when your emotions no longer drive what you buy.
Emotional spending is about spending money in response to emotional triggers instead of rational needs. While most people are guilty of emotional spending at some point in their lives, it can significantly impact their finances in the long term. Emotional spending differs from regular spending because it occurs when we allow our feelings (such as fear, panic, overwhelm, anger, and insecurity) to drive our financial decisions.
How Advertisers Use Psychology to Entice Emotional Spending
Advertisers and marketers use many tactics to trigger emotions in their target audiences, thereby leveraging psychology to encourage people to purchase their products or services. Understanding the psychological triggers of consumers has proved to be a game-changer in the world of advertising and marketing as they capitalize on our emotions to make us spend more.
Emotional Intelligence to the Rescue
Our emotions can significantly influence our spending decisions, leading to impulsive purchases, overspending, and debt. But what if we could use emotional intelligence to deal with this behavior? Emotional intelligence gives us the skills to identify, understand, and manage our emotions and those of others effectively. As a result, we can participate in non-emotional spending from a place of financial awareness/consciousness, rationality, practicality, and equanimity (emotional groundedness and clarity). Research shows that our ability to manage our emotions is associated with lower levels of materialism and compulsive buying.
Emotional intelligence provides financial awareness, a key factor in curbing emotional spending. By understanding our financial situation, analyzing our spending patterns, and practicing budgeting techniques; we can gain control over our finances and make better-informed decisions about our money. Emotional spending and compulsive buying disorder are often linked since both are rooted in emotional triggers.
How Compulsive Buying Disorder Can Become Problematic
We all experience emotions, and it is common to have the occasional impulse to buy something when we are feeling down, stressed, or even happy. However, when these impulses become excessive, we may be dealing with a more severe problem: compulsive buying disorder.
Compulsive buying disorder, or shopping addiction, is an intense urge to repeatedly buy unnecessary items, despite the financial, emotional, and social consequences. According to a large survey, about 5% of the population have a shopping addiction. However, approximately one in 20 individuals suffer from compulsive buying disorder at some point in their lives. Being young and female are associated with a higher risk of compulsive buying disorder.
Compulsive buying disorder can affect people’s lives in a variety of ways, including:
- Impairing financial health by accruing debt, depleting savings, negatively impacting credit scores, causing bankruptcy, and more.
- Obtaining too many items to organize, store and manage which can exacerbate stress and cause time management problems.
- Leading to hoarding behaviors or disorders if they accumulate more items than are purged.
- Causing relationship conflict with significant others, loved ones, or business partners.
- Lowering one’s confidence and feelings of worth can trigger depression, anxiety, eating disorders, and substance use disorders. In fact, financial distress accounts for 16 percent of suicides in the US and correlates with lower life satisfaction and higher stress, anxiety, and depression.
Behavioral Health Conditions Predisposed to Impulse Buying
Even if you aren’t dealing with a clinical diagnosis for the following mental health conditions, you can probably relate to some of the symptoms associated with these disorders.
- Addiction: Addiction can make it difficult to regulate behaviors, which creates poor impulse control. The good news is addiction is treatable, and financial recovery is possible.
- Substance misuse: When under the influence of drugs and alcohol, people tend to be less inhibited and more likely to spend. Usually, they aren’t thinking about how to control their spending habits.
- ADD/ADHD: Those with ADD/ADHD are more easily distracted. Often, that means they are susceptible to buying the next "shiny object" that grabs their attention.
- Anxiety: People with anxiety disorders experience worry, restlessness, nervousness, panic, and catastrophic thinking about the future. All of these can fuel a desire for services, products and resources in an attempt to alleviate the unease.
- Depression: Depression is associated with lower self-esteem and feelings of inadequacy. This feeling can make you more susceptible to marketing efforts that try to convince you that having the right clothes and material possessions will make you worthy of love and success.
- Personality disorders: Deep-rooted personality issues may cause people to spend more. Those with Narcissistic Personality Disorders suffer from grandiosity and may feel entitled to spend beyond their means. Others with Borderline Personality Disorder may feel positively empty and turn to spending to fill that need.
Why Is It So Hard to Reach Out for Help?
Barriers like shame and stigma around financial struggle and behavioral health problems often keep people from seeking the help they need and deserve. Because compulsive spending is an addictive, compulsive disorder, sufferers are often in denial that their spending is a problem. They may use defense mechanisms like denial, rationalization, intellectualization, or projection to avoid dealing with their addiction. For this reason, it is important that loved ones find the courage to address the issue with love and compassion and recommend services such as counseling or therapy, consumer credit counseling and debt consolidation, and twelve-step support groups such as Spenders Anonymous, Debtors Anonymous or Gamblers Anonymous. 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.
Emotional spending can be harmful in many ways as it leads to financial problems, debt, and even a decrease in mental health. By using the psychology of emotional intelligence, you can manage this behavior and avoid the negative consequences. When your emotions no longer drive what you buy, you will experience the relief of improved mental and financial health and resilience.