Conquer Emotional Spending

We may think that we are logical and in control of most of our actions. But are we really? We all get mad and impatient in traffic now and then. We often get frustrated with others when things don’t go our way. And many of us turn to Cookies and Cream or Doritos when we need an emotional lift.

Do the same emotional triggers that seem to control many of our eating habits also control how we manage and spend our money?

Of course they do. Those triggers are why there will always be another fad diet to replace the previous one we couldn’t stick to—and why that analytical spending plan won’t motivate enough discipline in you for you to follow it without cheating.

But just as emotional eating adds to our waistline, emotional spending adds to our financial stress. The results are often disastrous not only for our day-to-day finances now but also for future enjoyment in our retirement years.

So whether it’s spending and saving, or worrying about the stock market, how can you win this battle? Here is a three-step process that will help:

Recognize your triggers. You can’t change if you don’t own the problem, so do some self-diagnosis by answering these questions:

Do you have trouble saying “no” to the financial needs and wants of others?
Are most of your spending decisions made in the spur of the moment?
Do you shop online late at night, or as a form of procrastination, or when you’re bored?
Do you find yourself frequently throwing out or donating lightly used or unused purchases?

Create your dream list. Many of us spend emotionally because our vision for our spending and saving plan is not as important to us as how we feel at the present moment. Discover your “why” for saving toward big or distant goals by making a dream list of things you want to do, have, or be. Be sure to keep the impact-value of each goal in mind. For instance, if you have trouble saying no to others because of your giving heart, maybe one of your impact-value goals could be to build a portfolio of investments that will grow and fund ongoing giving long after you are gone. Chose dreams that matter to you.
Substitute your feelings. Keep a reminder of your dream list where you will see it often—in your wallet, by your computer, and on that instant-pay app on your phone. Whenever you are tempted to give in to one of your spending triggers, remind yourself of how you will feel if you can have, do, or be something on that dream list. Then hang onto that new, better, and longer-lasting feeling associated with following your goals rather than falling for instant gratification.

We will always have emotional triggers. The trick is to manage them by creating an even more powerful influence over your money decisions. So go ahead and dream—but dream about what gives your life meaning and purpose. Leave the emotional binging to the Doritos.

Andy Raub is the author of The Encore Curve: Retire with a Life Plan That Excites You. If you want to know more about how the emotional spending could ruin your retirement, go to EncoreCurve.com and download his free e-book, “The Five Biggest Retirement Dangers That Money Can’t Fix.”