Retail Therapy: Understanding the Urge to Splurge - Money Tip Tuesday

Have you ever wanted to buy something, not because you need or want it, but because it makes you feel good? It may come about when you feel like celebrating a special event or a promotion, so you decide to splurge a little bit on something special. Or if you had a bad day and you need a little emotional boost, so you finally allow yourself that thing you've always wanted but have resisted buying in the past.

That's what emotional spending, also known as retail therapy, is. The harsh reality is that it occurs often for many people and can cause financial challenges if not kept in check.

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Transcript:

Welcome to Money Tip Tuesday from the Making Money Personal podcast.    

Retail therapy is a way people cope with feelings, good or bad by purchasing items to either maintain a happy mood or to change a bad mood into a good one. The problem with relying on spending to improve your mood is that it can be too easy to overspend on things you weren't planning to buy in the first place. Unless you had a line item in your budget for impulse purchases, your retail therapy items weren't budgeted for at the beginning of the month.

Depending on the items you're purchasing, this could send your budget into a tailspin and add to an already increasing level of stress, possibly even leading to debt.  Emotional spending is something we all experience from time to time. But what happens when it becomes a problem? When we find we now have a larger credit card bill than originally planned for? Or when we have less money to cover certain bills because we decided to treat ourselves to a new vehicle, expensive clothing or the latest technology? How do we solve that issue? 

Well, the real fix to the spending damage depends on the type of spending you got yourself into, but there are ways to curb your emotional spending habit and keep yourself from making those unplanned purchases in the first place.  Here are some tips on how you can avoid falling into emotional spending.

Our first tip is to try the 24-hour or 30-day rule. The idea behind this rule is to wait a certain amount of time before making a purchase. If there is something you have your eye on, don't impulse it. Make a conscious effort to wait a little time before buying it. For some items, 24 hours is enough; for others, 30 days may be necessary. This tactic will help you keep your emotions out of your purchasing decision and help you avoid buyer's remorse. If you find that after the waiting time is up, you still want the item, then by all means, purchase it.  

Our second tip is to hide your credit cards. Don't hide them in a place where you'll lose them, but at least put them in a place where they may not be as accessible. Keeping them at a distance may decrease convenience and make it more difficult for you to emotionally spend.

Third, give yourself a budget item for spontaneous purchases. Allowing yourself some extra money a month is a great way to enjoy the freedom to treat yourself. Set aside an amount of money for those times you want to go out and buy yourself something nice. It keeps your budget in shape and keeps you in control of your spending.

And finally and most importantly, talk to someone about how you're feeling. If you find that you're repeatedly going shopping or buying items to cope