Why Do We Keep Buying Things We Don't Need?

In this newsletter, we'll delve into the psychology of emotional spending, identify common triggers, and provide actionable strategies to help you take control of your finances.

Welcome to ThriftyOwl.Club, where we explore financial mindsets and hacks, helping you enhance your financial acumen one hoot at a time.

We've all been there: a bad day at work, a stressful week, or simply a craving for something new. And before we know it, we've swiped our cards on a shopping spree, ordered that extra dessert, or splurged on a non-essential item. This impulsive behaviour, often fueled by emotions, is emotional spending.

Emotional spending refers to purchases made not out of necessity, but in response to emotions such as stress, sadness, excitement, or boredom. It’s easy to think, "I deserve this," or "This will make me feel better," when emotions are high, but these purchases often provide only temporary satisfaction.

In this economy, where consumerism is rising and online shopping has become more accessible than ever, emotional spending can be an even greater challenge. With platforms like Amazon, Flipkart, and Myntra offering endless choices at the click of a button, controlling impulsive purchases is critical to maintaining financial health.

Understanding the Psychology of Emotional Spending

Emotional spending is a complex behaviour influenced by various psychological factors:

• Reward Seeking: Our brains are wired to seek pleasure and reward. When we feel stressed or down, we may turn to shopping as a quick fix to boost our mood.

• Social Pressure: Societal expectations and peer pressure can also drive emotional spending. We may feel compelled to keep up with the influencers or buy gifts for others to maintain social status.

• Boredom and Loneliness: When we're bored or lonely, we may seek distractions through shopping. Retail therapy can provide a temporary escape from negative emotions.

Common Emotional Spending Triggers

1. Stress and Anxiety: When we're feeling overwhelmed or anxious, we may seek instant gratification through spending.

2. Boredom: To alleviate boredom, we may engage in mindless shopping or excessive spending on entertainment.

3. Loneliness: Spending can sometimes be a way to distract ourselves from feelings of loneliness or isolation.

4. Low Self-Esteem: We may use spending to boost our self-esteem or feel more confident.

5. Rewarding Ourselves: We may reward ourselves with purchases, even for small accomplishments.

How Emotional Spending Impacts Your Finances

Emotional spending can quickly derail your financial plans. The instant gratification that comes with a purchase is often followed by feelings of regret, especially when the monthly budget is strained, or credit card bills start mounting.

In the current economy, where financial literacy is still growing, many people struggle to understand the long-term consequences of impulsive spending. Whether it’s buying beyond your means or relying on credit, emotional spending can lead to debt, missed savings goals, and delayed financial independence.

Actionable Strategies to Curb Emotional Spending

Now that you're aware of your triggers, it's time to take action. Here are some practical strategies to break free from emotional spending:

1. Recognize Your Triggers: The first step to overcoming emotional spending is to identify your triggers. Pay attention to your emotions and thoughts before making a purchase.

2. Practice Mindfulness: Mindfulness techniques, such as meditation and deep breathing, can help you stay calm and focused. When you're mindful, you're less likely to make impulsive decisions.

3. Set a Budget: Creating a budget can help you track your spending and avoid overspending. Allocate specific amounts for different categories, such as groceries, utilities, and entertainment.

4. The 30-Day Rule: Before making a non-essential purchase, wait for 30 days. This gives you time to reflect on whether you truly need the item. Often, the initial urge to buy fades away over time.

5. Avoid Impulse Shopping: When shopping, have a specific list of items you need to buy. Avoid browsing aimlessly, as this can lead to impulse purchases.

6. Find Healthy Alternatives: Instead of shopping, find healthier ways to cope with negative emotions. Exercise, spending time with loved ones, or pursuing hobbies can help you feel better without spending money.

7. Reward Yourself Wisely: Instead of rewarding yourself with material possessions, consider non-monetary rewards, such as a walk in nature, reading a book, or spending time with friends and family.

Building a Strong Financial Mindset

Emotional spending can be a major obstacle to achieving financial freedom, but with the right mindset and strategies, you can overcome it. By recognizing your triggers, setting a budget, and finding healthier ways to cope with emotions, you’ll gain control over your spending habits.

So next time you feel the urge to make an impulsive purchase, step back and ask yourself: "Am I buying this because I need it, or because I’m feeling a certain way?" With awareness and discipline, you can conquer emotional spending and build a brighter financial future.

Recommended Reads:

• Why is Money So Emotional?

• Why Is Saving Money So Hard?

• Are You Being Crushed by Credit Card Debt?