This phenomenon isn't just about the occasional indulgence but a cycle where emotions heavily influence spending habits, often leading to regret and financial strain. As a credit union rooted in Saskatchewan, we understand Canadians' unique financial struggles. In this blog, we'll discuss emotional spending and share strategies to overcome this cycle, empowering you with the tools to achieve financial wellness.

What is Emotional Spending?

Emotional spending occurs when we use shopping to deal with emotions, whether stress, sadness, boredom or even joy. Unlike planned purchases, emotional spending is impulsive and can quickly derail financial goals. It's a temporary fix that masks emotions rather than addressing the root cause. Recognizing the signs of emotional spending is the first step toward breaking the cycle.

Signs of Emotional Spending 

1. Shopping to Cope with Feelings: Turning to retail therapy as a primary coping mechanism for emotional distress. 
2. Regretting Purchases: Frequently regretting purchases soon after making them.
3. Financial Strain: Struggling to meet financial obligations due to unplanned spending.
4. Hiding Spending: Feeling the need to hide shopping habits or purchases from loved ones.
   
   

Strategies to Overcome Emotional Spending

Understanding what triggers your emotional spending is crucial. Is it stress from work, loneliness, or the thrill of a sale? Try naming the emotion or writing it down. Recognizing these triggers allows you to seek healthier coping mechanisms.

A budget is a powerful tool that gives you control over your finances. Allocate funds for necessities, savings, and a small amount for treats. The goal is to curb emotional spending, and budgeting for impulsive buys is something you can do to stay in control.

Setting short-term and long-term financial goals can provide motivation and a sense of purpose. Whether it's saving for a down payment on a home or planning a vacation, having clear goals can help you pause before tapping your card.

Instead of turning to shopping, find healthier ways to deal with emotions. This could be through exercise, spending time with loved ones, pursuing a hobby, or even seeking professional support. Experts suggest journalling to understand where your habit stems from so you can change the behaviour at the root.

Paying with cash can make you more mindful of spending. It's tangible and limits your purchases to what you can afford at the moment, reducing the temptation to overspend.

Retailers often lure customers with the promise of deals and exclusive offers. Unsubscribing from marketing emails reduces the temptation to make impulsive purchases.

If emotional spending significantly impacts your financial health, consider seeking advice from a professional. 

Overcoming the cycle of emotional spending is a journey towards financial freedom. It requires self-awareness, discipline, and, sometimes, external support. Remember, it's okay to seek help, and it's possible to break free from the cycle.

Sources:

¹ What Is Emotional Spending? Actionable Tips & How A KOHO Prepaid Mastercard Can Help

² The Psychology of Emotional Spending | Psychology Today Canada

³7 Ways To Control Emotional Spending | Bankrate