What is Emotional Spending?

2020 has been a very emotionally straining year for a lot of people. From unemployment, to health, to lack of social contact, and more, people are feeling very drained. Unfortunately, during these times of stress, people often find unhealthy ways to deal with issues. That is where emotional spending can become a real problem. When people spend money in order to distract themselves from how they feel or what’s going on in the world right now, that can lead to a very bad behavior which can hurt your financial situation.

What to Look For

There are signs that you can be aware of which can indicate there may be an emotional spending issue going on. If you find yourself buying items that don’t bring value and/or aren’t being used, then that can be a good sign. You also want to be aware if you are “hiding” your spending habits from people in your life. An example of this would be if you are accumulating credit card debt yet not telling your spouse. That is a huge red flag.

The Line Between a Little too Much and a Full-Blown Problem

Understanding that you may have a problem and you adjust yourself is different from realizing there is a very serious issue going on. Often times people confuse numerous small purchases as being less worrisome than a random splurge purchase. However, at the end of the day it doesn’t matter what the money is spent on, they both are equally unhealthy. Emotional spending also doesn’t necessarily mean you feel sad or angry, you can also just feel bored and/or unsatisfied. You want to make sure you can understand your spending patterns and behavior.

Why Emotional Spending is a Danger

You may get short term improvement in your emotional state when you feed into your emotional spending habits. However, you could face some real issues if you continue this trend. From your own standpoint you can set yourself back on savings goals, mess up your credit score, and put yourself in debt. You also run the risk of hurting your finances later on down the road. For example, if you used your emergency fund to buy products from emotional spending, and an emergency were occurred, you would have no safety net. However, you can also affect the relationships around you. If you have a partner that you hide purchases from, you are messing with their financial situation as well. You also create a lack of communication and distrust which can lead to problems developing in the relationship. If your emotional spending gets so out of control then you rely on the help of other people like your parents, you can breach their trust if you continuously fall into the same habits and keep needing help.

How to Fix Your Emotional Spending

It is important to buy items that you like, that also give you some fulfillment. However, the key to this is moderation. You want to set aside a small amount of money that doesn’t affect your finances and still keeps your responsible. Make sure to set financial goals for yourself so that you can continue to ensure you are reaching the milestones that you need to. If you find yourself still breaking the budget, then you may want to consider seeking professional help. There are resources available to help you manage the debt you’re in and set forth better habits for when you feel like emotional spending.