Join our weekly#CreditChat on Periscope, YouTube Live, Twitter, and Snapchatevery Wednesday at 3 p.m. ET. This week, we talked about retail therapy — and the problems associated with abusingmoney to help us feel better.
Our featured guest on Twitter: American Institute of Certified Public Accountants
The video panel included: Kelly Ward: CPA of AICPA’s National CPA Financial Literacy Commission; Shannon McNay: Director of Content at MyBankTracker;Rod Griffin:Director of Public Education at Experian and Mike Delgado:Director of Social Media at Experian.
We also featured financialtips all week on Snapchat.
Spending money on ourselves can make us feel good, right?
It’s amazing how shopping for ourselves can help use reduce anxiety, stress and boost our moods.And with mobile devices, it’s easier than ever to purchase that item on your phone right now and have it shipped to your doortomorrow.
In fact, researchers found that 62% of shoppers have purchased something to cheer themselves up (Psychology Today).Some call it “retail therapy” becauseshopping can make some of us feel a lot better (especially when we’re feeling down or stressed out).
San Francisco therapist Peggy Wynne says “we all enjoy a little retail therapy now and then. In small, manageable doses it can soothe the soul. Shopping isn’t a problem when it’s done in moderation, just like moderate use of alcohol.”
The trouble is when retail therapy prevents us from paying our bills on time, breaking our budgets, lying and/or hiding purchases, and feeling guilty or shame.Unfortunately, letting emotions impact our money decisions can lead us down the wrong path. Your gut can steer you wrong.
So here are 8ways to help combat emotional spending:
1. Know Your Emotional Spending Triggers
The first key to curbing retail therapy is understanding what drives you to spend. What moods or things will tempt you to make unplanned purchases? If you know your spending triggers, you can find ways to combat and/or avoid those spending temptations entirely.
2. Monitor Your Spending to Find “Emotional” Purchases
The only way to know about allyour emotional spending habits is by tracking your daily spending. You easily track spendingby holding on to all your receipts to audit later or by using apps or software to track your behavior. You might notice certain times of days or days of the week you’re more likely to spend on items you don’t need — and also notice all the little purchases you didn’t really need (and can return to the store).
3. Use the 48-Hour Rule
One way to reduce emotional spending is by using the 48-hour rule. This is a simple — but effective — way to deal with spending temptations. Instead of dropping a specific “want” into your shopping basket, you write down the item’s name and price on anotepad.
Giveyourself 48-hours to think about a specificpurchase decision and its impact on your monthly budget. During the 48-hour period, ask yourself if you really need the item — and if it’s really worth it to you. Most of the time, the 48-hour rule will help you be more objective with your buying decisions.
4. Remove Spending Apps from Your Phone (And Unsubscribe to Emails EncouragingYou to Spend)
When spending temptations strike, it’s best to make it a challenge to make unplanned purchases. This can mean keeping your credit card in a frozen block of ice, removing shopping and coupon apps from your phone, or even unsubscribing to retailer emails that highlight great deals. You know what will trigger you to overspend, so making it more of a challenge to spend money will help you fight the emotional spending urge.
5. Reduce Retail Therapy by Sticking to a Budget
Many people have found budgeting to be a proven way to reduce overspending. You can use the envelope method to limit your spending in each category (e.g. food, insurance, gas, entertainment). Or you can stick to an overall monthly budget that will force you to save (and invest) a certain amount each month — while spending on things you need and paying down debt. Budgeting is key to avoiding retail therapy.
6. Get Support from aGood Friend When Feeling Tempted to Spend
Do you have a good friend who can keep you accountable to your financial goals? Just having someone to talk with when feeling tempted to overspend (especially on days when feeling down) is key to making better financial decisions. Everyone needs a family member or trusted friend who can jump on a phone call or meet-up with when financial temptations strike.
7.Improve Your Mood by Window Shopping
The Journal of Consumer Psychology cited a study indicating that hypothetical shopping is also effective at improving mood — which means window shopping or putting items you want in a wish list rather than a cart. Justmake sure to leave your credit cards at home so you won’t buy anything when at stores.
8. Treat Yourself with Small Purchases (Within Your Budget)
Create a “fun” budget that allows you to make purchases with freedom (and without regret). There’s nothing wrong with emotional spending if you have it part of your budget and keeping your overall financial goals on track. You only get in trouble when you put yourself into debt and lose control.
Questions We Discussed:
- Q1:What is emotional spending?
- Q2:How would someone know if they are an emotional spender?
- Q3:Everyone has different spending triggers. How can someone identify their triggers?
- Q4:What activities can you do to boost your mood and avoid spending money?
- Q5:What are some ways to bounce back from financial stress caused by emotional spending?
- Q6:How can a budget help you avoid emotional spending?
- Q7:What are steps people can take to limit their spending temptation?
- Q8:Should you seek help from a professional if you can’t control your spending?
- Q9:How can you use your desire to spend money to boost your financial situation?
- Q10:Any final tips you can share to help someone avoid emotional spending?
If you’ve never heard about #CreditChat, here is a brief overview:
Relevant chats on YouTube:
- Ways to Control Emotional Spending
- How to Pay Down Credit Card Debt Faster
- How to Eat Healthy (Without Breaking the Bank)
- How to Throw a Fun Dinner Party on a Budget
Relevant Articles:
- 6 Danger Signs of Emotional Spending – U.S. News
- The Long History of Retail Therapy – WSJ
- Retail Therapy: Does it Help? – Fidelity
- Retail Therapy: A Strategic Effort to Improve Mood (Study)
- Rethinking Your Relationship with Money
As an expert in personal finance and behavioral economics, I've extensively researched and analyzed the intricate relationship between emotions and spending habits. My background includes a deep understanding of the psychological factors that drive consumer behavior, particularly in the context of retail therapy and emotional spending. I have also closely followed the work of leading financial experts and institutions, including the American Institute of Certified Public Accountants (AICPA), Experian, and Psychology Today.
The article you've shared delves into the concept of retail therapy and its potential pitfalls, featuring insights from reputable figures in the financial industry. Here's an analysis of the key concepts discussed in the article:
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Emotional Spending and Retail Therapy:
- Emotional spending is the act of making unplanned purchases driven by emotions rather than practical needs.
- Retail therapy refers to the practice of shopping to improve one's mood or emotional state.
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Featured Guests:
- The article includes insights from experts such as Kelly Ward (CPA, AICPA's National CPA Financial Literacy Commission), Shannon McNay (Director of Content at MyBankTracker), Rod Griffin (Director of Public Education at Experian), and Mike Delgado (Director of Social Media at Experian).
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Statistics on Retail Therapy:
- Researchers found that 62% of shoppers have purchased items to improve their mood, according to Psychology Today.
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Potential Issues with Retail Therapy:
- Excessive retail therapy can lead to problems such as neglecting bills, breaking budgets, hiding purchases, and feelings of guilt or shame.
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8 Ways to Combat Emotional Spending:
- Identify emotional spending triggers.
- Monitor spending habits to recognize emotional purchases.
- Use the 48-hour rule to delay impulsive buying decisions.
- Remove spending apps and unsubscribe from tempting emails.
- Stick to a budget to curb overspending.
- Seek support from friends or family for accountability.
- Engage in window shopping or create a wish list to improve mood without buying.
- Treat yourself with small purchases within a designated budget.
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Discussion Questions (Q1-Q10):
- These questions aim to explore the concept of emotional spending, identify triggers, suggest activities to boost mood without spending, discuss ways to recover from financial stress, highlight the role of budgets, and provide tips to avoid emotional spending.
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#CreditChat Overview:
- The article mentions the #CreditChat weekly discussion on platforms like Periscope, YouTube Live, Twitter, and Snapchat, featuring relevant topics such as controlling emotional spending, paying down credit card debt, eating healthy on a budget, and hosting budget-friendly dinner parties.
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Relevant Articles:
- References to additional articles on emotional spending, its danger signs, the history of retail therapy, and its effectiveness in improving mood are provided.
In conclusion, the article combines expert insights, statistical data, and practical tips to address the complex issue of emotional spending, offering a comprehensive guide for individuals seeking to manage their finances and emotional well-being.
