Have you ever gone out on a big shopping spree while sad, stressed, or angry? Well, if so, you’re not alone.
Emotional spending, also known as “retail therapy,” is very common. When we spend beyond our means because we’re having a rough time at home or work, we can quickly drive ourselves into debt.
The good news is that there are actionable steps anyone can take to curb emotional spending, along with tools like those you’ll get by joining KOHO. Plus, KOHO’s unique savings tools help people manage their shopping habits and set savings goals. With KOHO’s app and prepaid Visa card, it’s easier to limit emotional spending and make the most of your money.
What is emotional spending?
Emotional spending is when someone goes out on a shopping spree during a period of heightened negative emotions. Whether it’s caused by sadness, anger, or stress, emotional spending often causes people to buy items they don’t really need or even want. You may have experienced this yourself, either while it’s happening or after the fact.
According to researchers at Butler University, people often engage in emotional spending because it’s a way to take back some control during a period of overwhelming negative emotions or low-self esteem. In fact, there is evidence to suggest that shopping may actually provide people with a rush of “happiness” hormones, like dopamine, serotonin, and oxytocin.
These feelings of euphoria may be why so many people opt for retail therapy during difficult times. But, emotional spending can be dangerous for one’s long-term financial health.
"According to researchers at Butler University, people often engage in emotional spending because it’s a way to take back some control during a period of overwhelming negative emotions or low-self esteem."
How to control emotional spending
When you spend excessive amounts of money to comfort yourself, it’s easy to rack up huge amounts of debt in a small amount of time. Here are some tips for reigning in emotional spending.
1. Identify any triggers
The first step to curbing any emotional spending is to understand what causes it. Once you figure out what events lead you to excessive spending, it’s easier to rein it in. Then, look for alternative ways to get past a negative emotional situation. Consider low-cost activities like cooking, exercise, knitting, reading, or journaling as alternatives to emotional spending.
2. Make spending less accessible
One of the reasons that people turn to retail therapy when they’re upset is because it’s so accessible. With the rise in popularity of online shopping, that new pair of shoes is just a click away.
To stop unnecessary splurging during periods of heightened emotions, it can be helpful to make spending money less convenient. One of the most common ways that people simplify online shopping is by saving their credit card information to their computers.
Although this speeds up the online shopping process, it can also make it easy to spend money on things you don’t need. The simple act of deleting any saved credit cards from computers and phones can be helpful to reduce excess spending.
People who prefer to use cash for their shopping can try to limit the amount they have on hand at any given time. Having to stop at an ATM before shopping, is often enough to make people reconsider going out in the first place.
With KOHO’s prepaid Visa card, it’s more difficult to get into debt while shopping. Unlike traditional credit cards, which allow people to shop well beyond their means, having to pre-load money on a KOHO card makes emotional spending much less accessible.
"When a budget doesn’t have any wiggle room, over time, our inability to buy things can lead us to splurge well beyond our means."
3. Create a reasonable budget
Although counter-intuitive, you may turn to binge shopping when you’re on a very tight budget. When a budget doesn’t have any wiggle room, over time, our inability to buy things can lead us to splurge well beyond our means.
This is particularly true for people that are prone to emotional shopping. When people rarely, if ever, have a chance to buy something they want, rather than something they need, they might feel more inclined to splurge when feeling down.
So, start by making a reasonable budget that puts aside a small amount each month for new clothes, tech, or any other “wants.” For help organizing your spending, try our ultimate budget template by entering your email at the bottom of this article. Or, if you’re having trouble managing your finances, we have some top tips for sticking to a budget.
4. Steer clear of advertising
Love it or hate it, advertising is everywhere. Unfortunately, these advertisements enable unnecessary emotional spending.
To limit the effects of advertising, unsubscribe from email blasts. Getting daily emails about sales and promotions is not going to help curb unnecessary spending.
You could even try installing an ad blocker to limit the number of advertisements you see on the internet. Finally, if online shopping is a problem, find another website to scroll through instead. Read the news, find a cool blog, or start learning a language online instead of shopping.
5. Limit impulse purchases
Impulse spending is a pervasive issue for many of us. Whether it’s a pack of gum at the supermarket or an add-on to an online shopping cart, the little items we buy add up over time.
A great way to limit impulse spending is to wait 24 hours before buying something. If you’re still willing to buy something 24 hours later, it probably wasn’t an impulse purchase or the result of heightened emotions.
KOHO’s budgeting and spending insights also make it easy to reduce any impulse purchases by highlighting where and how people spend money. If you’re a KOHO Premium user, the KOHO app offers access to financial coaching. It’s a useful feature beyond the scope of emotional spending, but certainly worth highlighting here as well!
6. Deal with the underlying cause
At its core, emotional spending is a coping mechanism for emotional distress. While finding strategies to limit emotionally-driven shopping is important, dealing with the underlying problem is even more crucial.
If you or a loved one is really struggling with their retail therapy habits, consider reaching out to a mental health professional. Emotional spending is a symptom of a larger issue, so getting help is likely the best long-term solution for a happier you, both mentally and financially.
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