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Are You an Emotional Spender?

Is your spending out of control? Identify if your retail therapy habit has gone too far.

Shopping is a form of instant gratification. Buying a new car or dress can provide a quick self-esteem boost. That’s because spending money is tied to our emotions.

While it makes us feel good to buy shiny new toys, we also adjust to new purchases quite rapidly, so it’s easy to feel the need to go back to the store or online to buy something else.

“Retail therapy is a band-aid,” says Megan McCoy, Ph.D., director for the personal financial planning master’s program at Kansas State University. It can also be an attempt to combat feelings of loneliness, insecurity, boredom, and fear. A Foundations and Trends in Marketing study also found emotional spending is often tied to relieving stress.

There’s nothing wrong with feeling a quick pick-me-up from a purchase if you’re having a bad day. However, McCoy says, “If you’re using it all the time, it’s not really going to lead you to a more sustainable happiness.”

If you’re constantly chasing the high of a shopping spree to avoid negative emotions, it may be time to take a look at your spending habits, especially if they are leading to negative financial consequences, such as credit card debt from overspending.

With that in mind, here are five steps to help you overcome harmful emotional spending.

Step No. 1: Identify the emotion behind your spending

“Most spending has an emotional component to it,” says Natasha Knox, a certified financial planner.

When you put that new item in your basket at the store or online shopping cart, take note of what you’re feeling by asking yourself the following questions:

  • What emotion are you currently feeling?
  • Why am I shopping in the first place?

“Every single decision you’re making is connected to a need, and some of these needs aren’t filled by spending, so increase the awareness of the emotion you’re feeling,” Knox says. “Was there a universal human need that you were trying to meet and how should you be meeting it moving forward?”

Pinpointing the exact emotional need you’re filling when you emotionally spend can make it easier to find cheap or free solutions that can lead to sustainable happiness, McCoy says.

Step No. 2: Understand your spending habits

“Even though our rational minds understand why we shouldn’t buy, there’s an even bigger desire to spend,” says Alex Melkumian, Psy.D, a licensed marriage and family therapist and founder of the Financial Psychology Center. “It’s a self-destructive behavior.”

And these behaviors can manifest in more than one way: by impulsive or compulsive buying.

Impulsive and compulsive buying are two types of emotional shopping motivated by making yourself feel better from negative emotions, says Grant Donnelly, Ph.D., an assistant professor of marketing at Ohio State University who studies judgement and decision-making.

Impulsive buying involves not fully processing purchases and buying things on a whim. Compulsive buying, on the other hand, is often triggered by mental health issues such as Obsessive-Compulsive Disorder, addiction, or anxiety. With compulsive buying, the act of buying does not necessarily focus on the object that has been purchased, but moreso on the act of spending.

“When you fall below your standards, you’re more inclined to overspend and make a compulsive or impulsive purchase as a way to regulate your emotions,” Donnelly says.

While it may be difficult to look at your bank account, reviewing your purchase history can help identify your spending patterns.

“If you’re spending impulsively, some people don’t want to look at that part of themselves and their behavior, so they’ll bury their heads in the sand,” Melkumian says.

It’s common for feelings of self-judgement, guilt, and shame to emerge going through this exercise. It may help to do this with a financial therapist who can provide financial and emotional guidance.

Step No. 3: Find your emotional triggers

Triggers for emotional spending will vary from person to person. Relational stress and work stress are two common triggers McCoy has seen with clients.

“When you feel like retail therapy, what were you doing and what or who were you interacting with?” McCoy asks. By pinpointing the exact emotional need you’re filling when you’re emotionally spending, it’ll be easier to find cheap or free solutions which can lead to sustainable happiness, she says.

Emotional spending can also become a reflex, even without a trigger. Being in specific environments may generate the urge to shop even if you don’t need anything.

Step No. 4: Develop sustainable strategies for dealing with stress

It can be easy to use retail therapy for a quick lift, but it can become problematic when it’s the only tool to help lift you out of a slump.

“Buying things more hedonic such as candy and designer goods can improve mood, but these aren’t lasting,” Donnelly says. “They are part of an effort to improve your life, but it’s not successful in improving circumstances, so you feel worse.”

Therapist Virginia Satir’s self-care mandala embraces eight universal human needs to fulfill, which McCoy says can be a starting point to find other sources of happiness:

  1. Intellectual
  2. Interactional
  3. Emotional
  4. Nutritional
  5. Sensual
  6. Spiritual
  7. Physical
  8. Contextual

The key point is this: Spending money shouldn’t be the only way to improve our lives. If you aren’t sure about whether or not you should splurge on a purchase, check out the below spending guide from OppU, which can help identify if you are showing signs of emotional spending.

Step No. 5: Introduce money management behaviors

Managing money is a core issue to master and it can be a slow process.

“There’s no magic pill to make you thin, and there’s no magic pill to master your finances, but persisting and addressing the numbers will eventually feel good,” Melkumian says.

When you don’t keep track of your finances, it leads to behaviors that go against your financial goals and well-being, Donnelly has found in his research. On the other hand, practicing basic money management habits, such as organizing receipts, creating a budget, and record-keeping, can actually make you feel better and more secure about your finances.

“Positive financial behavior leads to wealth accumulation, which leads to more positive money management,” Donnelly says. “You’ll be less likely to think that acquisition of new items will solve your problems.”

Article contributors

Grant Donnelly, Ph.D., is an assistant professor of marketing at Ohio State University’s Fisher College of Business. His research has been published in journals and media outlets across the country and focuses on how consumers can be encouraged to make decisions that improve their financial, physical, and social health. Additionally, his research has been published in “Psychological Science,” “Journal for the Association of Consumer Research,” and “Psychology Bulletin” among others, and has been featured in popular press, including Harvard Business Review and The Wall Street Journal.
Natasha Knox is a certified financial planner and the owner of Pax Planning, a fee-only financial planning practice on the west coast of Canada. She created Pax Planning with the mission of eradicating fear and guilt from her client’s personal finances by increasing their financial self-efficacy. Knox holds a graduate certificate in financial therapy from Kansas State University. She believes in giving back to her profession and serves on the board of directors of the Financial Therapy Association.
Alex Melkumian, Psy.D, is a licensed marriage and family therapist and founder of the Financial Psychology Center in Los Angeles. He is devoted to helping clients improve their financial and mental health by uncovering patterns in their relationship with money that keep them stuck and suffering. Specifically, he has worked with athletes to improve their financial wellness and overall performance. As athletes train with a singularity of focus to excel in their field, they often experience stress in other areas of their lives, such as finances. Helping clients understand how those factors interplay revitalizes client’s emotional and financial health.
Megan McCoy, Ph.D., a licensed marriage and family therapist and a Level-1 certified financial therapist, is the director for the Personal Financial Planning master’s program at Kansas State University where she teaches courses for the financial therapy certificate program. She is also the secretary for the board of financial therapy and the associate editor of profiles and book reviews for the “Journal of Financial Therapy.”

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5 ways to conquer money anxiety and set yourself up for financial success, according to mental health experts

Money can make people nervous. You might avoid checking your bank accounts or just assume you’re awful with money, because nobody ever taught you how to handle it. And if that’s you, you aren’t alone. More than 50% of people polled in a 2018 survey from financial services firm Northwestern Mutual reported feeling anxious and insecure around money.

But financial anxiety isn’t insurmountable. Try these five methods mental health professionals recommend to feel more confident around money, so you can manage it effectively and meet your financial goals.

1. Explore your anxiety

To better understand what sparks your anxiety, create a “money map,” suggests Ed Coambs, a certified financial planner and a licensed marriage and family therapist based in North Carolina. Think of this tool as a snapshot of the emotions underlying your financial life.

“The first step is to note all the places money intersects through your life,” he says, such as work, bills, retirement, friends, and vacation. Next, on a scale from 1 to 10, write down how comfortable you are in each area, with 10 being completely comfortable. For lower-scored categories, jot down the emotions that come up.

Coambs recommends asking yourself: “What happened in my past to lead me to feel this way?” Growing up with parents who were spenders or savers can shape our financial behaviors as adults in ways we might not fully realize. For example, psychologist Frank Murtha told Grow last year, “People [who] experience money worries as kids are more likely to carry forward that sense of scarcity and insecurity.”

Understanding when and how your feelings of money anxiety began can help you move forward and create consistent, healthy money habits.

2. Shift your mindset

Worrying that you’re doing money all wrong and will make a mistake leads to avoidance and procrastination, says Lindsay Bryan-Podvin, a Michigan-based couples financial therapist and coach, and the author of “The Financial Anxiety Solution.” When you finally do take action, Bryan-Podvin says there is a tendency for people to feel like they’ve fallen behind, which then “fulfills your original worry.”

To help encourage a more positive mindset, be realistic and kind to yourself. And choose language that feels good to you, says Bryan-Podvin.

Instead of changing “I’m terrible with money” to “I’m amazing with money,” which can feel fake and forced, tell yourself, “I’m working toward understanding money.” Instead of “I’m such an amateur,” say, “This is the first step of my money empowerment journey.”

3. Establish structure

Part of what drives money anxiety for most people is the “fear of the unknown,” or not knowing where your money is going, says Alex Melkumian, a financial therapist and founder of the Financial Psychology Center in Los Angeles.

“Having systems and structure provides containment for our emotions,” says Melkumian. With that in mind, he suggests finding a budget framework — like the 50/20/30 rule budget guideline — that works for you, to give you “the most comprehensive view of what’s coming in and what’s going out.” Automating a specific amount that you save from each paycheck, for example, can make saving and investing easier habits to stick with.

If your anxiety stems from lack of knowledge, Bryan-Podvin recommends tackling a new skill or small task each week, like setting up your 401(k) or learning about how compound interest works. That slow and steady pace prevents you from getting overwhelmed with information — and “over the course of the year, you’ll have learned 52 financial skills.”

4. Don’t go it alone

It’s easier to make changes and adopt an optimistic money mindset when you have support. Melkumian suggests finding an “action buddy” to hold you accountable. For example, you might text them before you make an impulse purchase.

It’s also helpful to make money part of everyday conversation, says Bryan-Podvin, such as, “Congrats on your raise! How did you negotiate that?” or “That’s awesome you got a new car. What dealer did you work with, and what did you think?”

Another simple way to connect with others in the same boat is through social media and following finance-themed hashtags like #debtfreecommunity and #financialfreedom, Bryan-Podvin says.

5. Make it fun

For many of us, money feels serious and tedious, which only amplifies our anxiety and angst. According to Bryan-Podvin, it’s important to make money fun, “otherwise it’s not going to feel good.”

For example, Bryan-Podvin says with that in mind, she and her husband set aside $50 per person each week. They are free to spend that money on whatever they like, no questions asked. It can be used for a spontaneous lunch or dinner out, or even something like a tattoo, which Bryan-Podvin recently saved for over the course of a few months.

Bryan-Podvin helps her clients create shorter-term savings for bigger purchases, such as vacations. “A lot of people think that saving money means they no longer have that money.” But saving for six months for a fulfilling purchase can feel empowering.

Anxiety can easily overwhelm us. But by actively learning new skills and finding a framework that makes you feel confident, you’ll be able to keep moving forward.

Margarita Tartakovsky, MS, is a freelance writer and associate editor at PsychCentral.com. She’s been writing about psychology and mental health for over a decade. You can learn more at https://www.margaritatartakovsky.com.

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Where Money and Emotions Meet

The Financial Psychology Center (FPC) is devoted to helping clients in uncover patterns in their relationship with money that keep them stuck and suffering. We provide clients with tools to help heal their financial anxiety and address maladaptive behaviors rooted in financial fear. We promote insight, awareness, and clarity not only around both your feelings and your numbers, to help you overcome obstacles and thrive financially.

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Discover Your Money Story

How does your brain process topics relating to money?

Think about bills. Think about home ownership. We each have preconceived ideas about what these mean, how we might deal with them, and how we feel about them. You didn’t have to think too hard to start making those associations, did you? Our brains create schemas to quickly determine the most likely threats and benefits of situations we’re faced with. These schemas are based on habitual actions, experiences, and lessons learned over time. Our past informs our minds on how to deal with the present. The same goes for how we deal with money.

We deal with money based on our experience with money in the past.

This is what we like to call a Money Story. A Money Story is a personal account of the role money has played across your life, from when you were very young, to now. Thinking deeply about your Money Story will help you determine how you approach finances today. Do the bills cause a monthly panic attack? Does thinking about debt make your heart stop? Do you buy things you know you can’t afford? Maybe discussing money problems with coworkers or friends seems completely out of the question. All these responses stem from your highly individualized past experiences with money, however, the good news is, your money story is not set in stone.

At the Financial Psychology Center we can help you map out your personal Money Story. We will help you to realize how it effects your current interaction with money and how you can change that story to be the Money Story you want!

While your Money Story starts in childhood with the first time you had to think about money and what that meant, we often begin by exploring what money means to you today. How do you react to a large bill? A large paycheck? How does saving money make you feel? Once you identify your immediate current reaction to money, you can dig deeper.

Many people, as children, didn’t have to think about money unless there was a lack of it. For others, control of money was a constant topic in the household. Take a moment to reflect on your first experience with money. What happened? Was it positive or negative? Did you learn anything? Can you identify any common threads to how you think about money today?

Investigating your financial potential.

How would your life change if you had a different Money Story? How would this new and improved Money Story help you achieve happiness? Visualizing a new normal when it comes to money helps get rid of the shame, fear, or uncertainty buried beneath your money decisions.

And ultimately, how can you utilize your new and improved Money Story to make positive changes in your life? Prepare to shift your habits to craft your new Money Story, one that you’d be proud to pass down to your children.

Doing this analysis of your money beginnings shows you why your current relationship with money is the way it is, and gives you the power to take control, creating a better future for you and your family for generations to come.