Do you ever spend money just so you can feel better? This article from Money Central talks about this subject, starting with the following introduction:
Some people shop because they're unhappy…or giddy, or anywhere in between. But retail therapy can leave your budget in sad shape.
I've certainly heard people say they feel better after shopping a bit. Here are a couple examples from the article:
"I never believed in emotional spending until about two years ago," admits Lyndsey, 26. "I'd had a really bad day at work, so I went out and spent about $500 at Banana Republic. And afterward I was, like: 'Wow! I just bought all these pretty things … and I feel so much better!'"
"Bad mood? Shopping and finding the cutest skirt or a slammin' deal will make you feel better," Stephanie, told me. "Good mood? Buying a pair of ridiculous, bug-eyed, Dior-wannabe sunglasses will make you feel that much more the rock star!"
Yikes! I've always thought that this type of shopping often leads to massive overspending. And that's the point of this piece:
Lots of people share the fantasy that retail therapy is a reasonable way to cure what ails you. And on the surface, it looks innocent enough. It's not illegal, immoral or cancer-causing. It doesn't involve the use of hazardous substances. But as Lyndsey and Stephanie are realizing, there is often a financial price to pay for emotional spending.
Lyndsey acknowledges that her stress-related splurges led to her $12,000 in credit-card debt. "I shop out of boredom, too," she adds. "If I'm online to get some shampoo, I'll end up getting some magazines, a pack of gum -- and my $5 purchase turns into a $40 one."
Stephanie thinks that spending can come from a misguided search for self-esteem. "As a society we're programmed to believe that we neeeeeeed these things -- so we can get a job or have friends or be seen in public," she says. "We base our emotional stability on it at times. It's almost like you'll feel worthless if you can't buy that awesome suit."
Jennifer Lerner, Ph.D., director of the Emotion and Decision Making Lab at Carnegie Mellon University, has actually studied the way feelings from one situation can spill over into our spending behavior. Lerner and her co-researchers showed subjects three emotion-inducing movie clips -- one revolting, one depressing, one neutral -- and then asked people to estimate how much they'd be willing to spend on a certain product. The people who had seen the sad movie clip were willing to spend the most.
How can you control this type of spending? Money Central offers several ways to combat emotional spending and thus gain even more control over your financial life:
Notice the feelings. Cultivate an awareness of what feelings are propelling you to spend, whether it's wanting to erase the fallout from a fight or to celebrate a sunny day. Lyndsey, for example, says she never appreciated how much that desire for instant gratification fueled her spending behavior.
Sort out the fantasies. Stephanie pointed out that it's tempting to spend when you want to impress a friend (by treating them to dinner, say) or to buy the outfit you imagine will make you a star at work. The fantasy is fine, just don't play it out financially.
Beware of small purchases. I have two friends who shop constantly, and they justify it because they always buy on the cheap. The discount myth falls apart when you realize that spending little bits of money all the time is just as bad as spending less often, but extravagantly. Stop and ask: Why do I need to buy something all the time? What am I trying to give to myself?
Treat yourself. The 60% Solution Budget (ideally) lets you spend a 10% chunk of your gross each month on pure frivolity. The wisdom of this is that no matter how tight things are, it's better to allot a specific amount for a treat than it is to impulsively spend the big bucks.
Avoid retail situations. I try hard to identify those threats to my financial sanity -- and avoid them like the plague. I rarely visit a mall. I don't do eBay. Catalogs: in the trash (mostly). If dining out is your undoing, consider cheap eating alternatives.
Create unique solutions. Lyndsey and I agreed that she might save herself hundreds of dollars each year simply by carrying a juicy thriller in her purse to get her through dull moments. I've found that taking the scenic route (i.e., one without tantalizing shop windows) helps me.
Let your priorities be your guide. There will always be bad days at work, fights with your spouse, loneliness, tension, etc. But rather than spend as a result, I try to keep my priorities in mind: Do I really want to spend on X? Or do I really want to get out of debt? As Stephanie put it: "It's like doing the opposite of what you feel like doing, but it still satisfies that emotional thing, because you're fulfilling a goal."
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