So you’ve set yourself a budget and promised to stick to it, but then an irresistible urge to spend shatters your resolve.
Despite the popular belief that the most financially successful people are those who can disregard their emotions, the opposite is actually true, says professor peter bossaerts, an expert in experimental finance and decision neuroscience.
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Emotions are vital to making rational financial choices but it’s key to listen to your emotions in the right way to learn when to trust your intuition and take calculated risks in the same way successful sports people have learnt how to trust their gut feelings,’ he explains. being aware of your moods and how they influence your spending behaviour can save you from making purchases you’re likely to regret. Financial therapist Jane monica Jones explains why your emotions can affect your bank balance, and she shares her tips for getting back on track when they do.
Sadness
Why It Happens
If you’ve ever spent money just as a way to cheer yourself up, you’ll know that retail therapy is very real, and it begins in childhood just think about those times when your parents gave you a treat to make you feel better. our relationship with money as a means of rewarding ourselves begins before the age of seven and it’s why we think that new outfit or extravagant purchase will solve all our problems. Spending money offers us a quick fix by triggering the reward centre in the brain and provides a momentary distraction from the real cause of one’s sadness. But if you’ve ever splurged to give yourself a mood boost, chances are your cheerfulness didn’t last long and you were probably left with some regret as well as an emptier purse.
What you can do
Try take note of how you’re feeling before you shop and be sure of the real reasons for your decision before you make a purchase. Ask yourself if the item is going to help you address the cause of your pain or if you are just looking for temporary relief. Impulsive spenders tend to forget or downplay past indulgences and buyer’s remorse, making it easier to succumb to future temptations. Keep a spending journal and document the purchases you make on a whim and how they made you feel. This can help you to identify your spending patterns and get your budget back on track.
Happiness
Why It Happens
You landed that new job, you’re expecting a significant tax rebate, or just because life is running smoothly and you’re feeling hopeful about the future. Happiness can boost your optimism as well as the need to use that credit card even if you’re already in debt. It’s easy to see a celebration as a valid reason to splurge now and worry about the consequences later.
What you can do
Instead of indulging in that joyful spending spree, be generous to yourself in ways that will be spiritually valuable. Meditate, have a massage or pampering session, and make plans to achieve something that will fill your heart with joy rather than just adding to your possessions.
Impatience
Why It Happens
You love a bargain and you are suffering from buyer’s FoMo (fear of missing out). You hardly hesitate when presented with a good deal on that longed-for but not entirely necessary purchase. When you need something, you need it now, so you tend to choose the express delivery option when ordering online, or you will settle for whatever’s in store rather than waiting a week or two for the item you really want. Most of us are used to having immediate gratification we can access the latest online news, instantly contact friends and loved ones via social media, and find information at the touch of a button, so it’s no wonder we’ve become impatient spenders. The idea of saving up or waiting for things we want makes us worry we’ll miss out.
What you can do
Make a conscious decision to be grateful for the good things in life. And yes, most of them are actually free. Gratitude not only creates a sense of fulfilment but also increases financial patience, making you more amenable to the delayed gratification that will protect your bank balance.
Anger
Why It Happens
Fury is similar to fear in that it triggers the ‘fight or flight’ stress response. It’s an emotion that commands action, and for some of us might result in hasty financial decisions. Those experiencing a messy relationship break-up or divorce are more at risk; some use overspending as a way to punish a partner who is not giving them what they want, taking revenge by ‘hitting them where it hurts’. But despite what they say, revenge is never sweet. Angry spending can usually be financial self-sabotage, and when it’s a means of avoiding the perceived pain of a failed relationship it’s unlikely to have a lasting effect.
What you can do
Find other, less costly ways to deal with anger, especially if your go-to response in the past has involved spending more than you can afford. Cut up your credit card before you dig yourself an emotional and/or financial hole from which it may be difficult to escape. Physical activity or mindful meditation can help you get back in control but that doesn’t mean punching something or finding a quiet spot to stew over your problems. Before you hit the shops, visit the gym or go for a walk and you’ll be operating on a clearer head and a calmer mind.
Guilt
Why It Happens
The real issue associated with guilt spending is shame, an emotion even more powerful than fear in terms of things we’re likely to go to any length (or cost) to avoid. This is why the partners and the children of people who spend more time at their jobs or hobbies than they do with their families might find themselves being recompensed with material goods instead of attention. or it’s why you’re more likely to spend big on a belated present if you forgot someone’s birthday. Gifts are not an effective replacement for an apology; they might buy you some time and temporarily make you feel better about yourself, but money won’t buy you love, and it won’t buy you out of the big issues.
What you can do
Dare to be vulnerable. Admit your shortcomings, resolve to learn from them and sincerely ask for forgiveness, because it will be more effective in the long run than that hastily bought gift card or extravagant flower arrangement. Buying presents based on guilt rather than love might make you feel better about yourself, but it’s a self-serving exercise that does nothing to mend a relationship when you’re in the wrong. Try to set aside quality time to connect with loved ones to prevent the guilt in the first place.
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