Do you ever find yourself checking your bank account or credit card balances and wondering where your money went, only to realize it’s all in your closet? Do you find yourself splurging a little too often on a new pair of shoes, new clothes, or even eating out? Unfortunately, emotional spending is a problem for many of us that leads to overspending on things we really don’t need. Thankfully, there are ways to break the habit of emotional spending, so that we can put our money to better use and improve our overall financial situation.
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Track your spending
One of the best ways to break the habit of emotional spending is to take a good, hard look at your actual spending habits. One way to track your spending is to obtain a copy of your bank statements for the past month and review the purchases you made. There’s also a number of smartphone apps such as Toshl Finance and Expensify, that allow you to track your purchases. Using these apps and checking your bank statements will allow you to see where you are spending your money over the course of a month. Write down purchases that were unnecessary or were spur of the moment. Notice the frequency of these purchases.
Pinpoint your triggers
We all have some type of emotional triggers. These triggers can be stress at work, family issues, relationship troubles or any other issue that may be plaguing us in our daily lives. Much of our emotional spending comes from using shopping or spending money as a method to deal with these triggers. It is helpful to write down your emotional triggers, whatever they may be. This may be difficult early on, as it may be hard to pinpoint exactly what it is that may be bothering us. But once you begin to make a habit of observing your behavior, it will become much easier to narrow down what these triggers are.
Find better alternatives
Now that you have been able to identify your triggers, the solution is to find better alternatives than overspending, to deal with these triggers. There are many, productive ways you can deal with your emotional triggers, other than spending money on things you don’t need. Working out, calling a friend and family member to vent, journaling, etc. are all good ways to begin working through your emotional triggers, and avoid overspending. Find out what works best for you.
Create a Budget
In a previous post, I discussed how to streamline your budget. Creating a budget that not only includes your major expenses and monthly bills, but also allows for a little room to spend on entertainment and miscellaneous items will help you to keep on track and reduce your emotional spending. A budget helps you to organize your money and spending, so that you know exactly how much money you are able to dedicate to spending on entertainment and miscellaneous shopping.
Emotional spending is a habit for many of us that, if left unchecked, can lead to overspending and even large amounts of unsecured debt. While we all may want or even deserve a splurge every now and again, the point is to not make it into a habit or our only outlet when we are stressed or dealing with difficult emotions. The steps above will help to get your emotional spending under control, so you can get a better foothold on your finances.
Photo Credit: John Goodman Fanclub Spain