Know the signs of emotional spending

This was originally published on Monday, August 1 ,2016 in the Pacific Daily News.  Click her

Emotional spending occurs when a person purchases something they don’t need when they are in a certain emotional state. These emotional states can arise from stress, low self-esteem, dealing with a loss, loneliness, or wanting to improve their emotional state. Just as some people who use binge eating, alcohol, or drugs to cope, emotional spending can quickly get out of control. Emotional spending can rearrange a person’s financial priorities. Bills may not get paid, it adds tension on relationships, and it can take years to repair credit that was overused.

The first step to managing emotional spending is to realize you may have a problem. Watch out for these emotional triggers that may indicate you may be an emotional spender.

  • Immediate gratification. We live in a “now” society. Everything is instant. We can get almost everything we want in a short amount of time. We no longer must have cash on hand to purchase what we desire. If we are feeling down or stressed, we can take advantage of being able to feel better now. There are experts who say that retail therapy can actually help improve your mood and remove anxiety. However, it is a temporary fix, and should not be relied on to continue to feel good. If you come home with buyer’s remorse it can only add stress to the actual problem. Before purchasing something to instantly improve your mood, consider your purchase for a few days. During those few days, decide if it will ruin your budget, or do some research and see if you can get it at a better price.
  • Our image. Most of us have heard of the idiom “keeping up with the Joneses.” This saying refers to comparing yourself with your neighbors. The thought is the more material goods you accumulate the better your social standing. If you fail to “keep up with the Joneses,” you are inferior to your neighbors. Unfortunately, this idiom is repeated over and over again in television shows and movies. Caring more about how others perceive us, and not about how to provide basic necessities, is a warning sign that you are an emotional spender.
  • Justifying purchases. When we get a promotion, a raise or come into some extra money, it is OK to treat yourself as long as most of that money goes to bettering your finances. Make a payment on your credit card or a loan. Deposit it in savings, or start an emergency fund. Then treat yourself. If you justify that “I deserve this” as a reason for a shopping spree, you may consider looking a little deeper into the cause of this feeling. Most items that you need do not have to be justified. Most emotional purchases need justification because deep, down inside you know you are not using your money wisely.
  • Buyer’s remorse. Some of us get an adrenaline rush from shopping. If you go home with a feeling of “I know I cannot afford this,” the guilt will eventually eat away at you. Many people try to correct this feeling by returning items as damage control. This can become a viscous cycle of shopping and returning items. Returning items may even cause one to feel inferior and lower their self-esteem because they are not in a place to be able to treat themselves. Several stores have a restocking fee or a fee if you missed the deadline to return an item. This will cost you more money than you actually spent.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at and read past columns at the Money Matters blog at


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