How your emotions influence your spending habits

Have you ever worked hard for something, only to feel a deep pang of regret after the initial excitement wears off?

One thing a lot of people don’t realize is that our emotions drive how we spend our money every single day.

We are influenced by what we see, what we feel, what we’ve been told growing up, and even the person we aspire to become.

When you don’t have awareness of what is driving your purchasing decisions, you can easily find yourself in a cycle where you spend money and later feel guilt or remorse and start asking yourself, " Why did I even buy this?

A lot of the time, the purchase itself is not the problem. The real issue is that we never stopped to ask ourselves what was influencing that decision in the first place.

When you start to understand the things that influence your spending, you can start putting controls in place so that your purchases are not solely driven by your emotions.

In today's newsletter, I'll break down some of the biggest influences.

What we see

A lot of our spending decisions start with what we see.

You might be minding your business scrolling through TikTok, and suddenly, you see someone using something, and it looks like your life will never be the same until you get that thing.

Maybe you saw your fav beauty influencer using a skincare device, and you start thinking that if you just buy that device, your skin will clear up and your life will be better.

But once you buy it, you realize your life is exactly the same as it was before.

That buying decision didn't come from you; it came from your desire to have skin as clear as the influencer you just saw using the skincare device.

This is why it’s so important to be mindful about what you are constantly consuming, because the more you see something, the more it starts to influence your decisions.

What we feel

Our feelings also play a huge role in how we spend money.

Stress is one of the biggest triggers.

You might have just finished a stressful project at work, and the next thing, you're booking a vacation to help you decompress. You tell yourself you deserve it because you’ve been working hard.

The vacation might feel great for a few days, but then you come back to the same responsibilities, and a credit card bill waiting for you, and now you're stressed all over again.

Joy can also lead to emotional spending. Maybe you just hit a major milestone, your birthday is coming up, or you got a promotion. Now you’re spending thousands of dollars and justifying it as a reward.

What we've been told

If you sit down to really think about some of the big goals you have today, you'll realize that many of those goals are actually goals you've adopted from other people.

Maybe you were told that by a certain age you should own a house, or you should have a certain type of career, or your kids should go to a certain type of school. Those ideas start influencing your financial decisions without you even realizing it.

Before you know it, you are spending large amounts of money chasing goals that you never stopped to question.

Who we think we should become

One of the biggest investments we make in life is in ourselves and who we aspire to become.

But have you ever stopped to ask yourself whether the version of you you're trying to become is 100% your idea, or if it's versions you've borrowed from other people?

You see your close friend thriving in her business, so you quit your job to start yours.

You see an influencer who's travelled to 30 countries, so that becomes your next goal.

Everyone in your close circle has purchased a house, and you're starting to feel behind in life, so you go and sign an 800K mortgage that's eating up the majority of your paycheck.

You go back to school for a Master's degree because you'll finally get the career and respect you deserve.

None of these goals are bad, but it’s important to ask yourself why you want them before making a six-figure decision you'll spend years regretting.

Controls to help overcome emotional spending

Awareness is the first step, but once you recognize these patterns, you also need controls in place so that emotional spending does not get out of hand.

Five Whys

One thing I like to do is use the Five Whys to analyze major decisions. When you want something, ask yourself why, and keep asking until you run out of whys. Doing this will help you uncover the overarching reason why you want to achieve that goal. Sometimes you realize that the desire was never that meaningful to begin with.

Will the joy outlive the pain?

Another control is asking yourself whether the joy of the purchase will outlive the pain of getting it. If something is going to cost you years of financial strain and stress, you need to ask yourself if it is really worth it.

How many hours of work will it require?

You can also calculate how many hours of work you'll need to put in to have enough money to cover the purchase. When you realize that the $200 dress you've been eyeing requires 5 hours of work, it makes the dress a lot less desirable.

Using a money system

An effective money system can also help you have clarity on where and how you spend. Keeping a wishlist instead of buying things immediately, saving for purchases using a sinking fund, or creating personal spending rules can all help you slow down your decisions and avoid buying things on impulse.

The goal is not to stop spending money. The goal is to make sure that your spending decisions are intentional and aligned with what truly matters to you.

In the latest episode of the Surplus Stack Podcast, I go deeper into these emotional spending triggers and the practical controls you can use to manage them.

You can listen to the full episode below.

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