Last Updated on December 18, 2021
Emotional spending refers to the instinctive disbursal of money and time at the cost of physical and/or financial health. Decisions are made in order to “feel better” without thinking about consequences.
Without sitting in judgement on whether this is a good or bad, here are some thoughts on the subject.
It is fashionable to say that stress has increased “these days”. Instant gratification has increased. Things were better in the “good old days”. Excuse me for disagreeing with that. I would bet that folks have been making the same observation for centuries.
Human life has always been stressful. For centuries man has spent much of his daily wages at a tavern at the end of hard days work – in the field, in a factory or as an investor banker or information technologist.
Instant gratification was always the norm even before any saving or investing was even possible. Before youtube, before the internet, before television and even before books were printed, there were plenty of ways of entertaining oneself in healthy and unhealthy ways. There were also plenty of ways to blow money without thought and enough people who did just that.
Nothing has changed aside from an increase in population which has led to more ways and means to spend.
How to handle emotional spending?
Advice is so easy to dispense with, especially by clueless folk. There are a lot of 10 ways and 15 ways to reduce emotional spending or stress spending posts out there.
I can tell you from experience that when subject to stress, when feeling anguished, the spending is a form of release and is hard to resist. In my case, it was not money being spent, but my health.
I have always had a problem with being 10-15 Kilos overweight and a problem with stress eating. I would end up eating crappy food as a release.
Four years ago, I had lost a good 25 Kgs and was in the prime of my youth and fitness when it was all taken away by an auto-immune disorder.
The despair from that, combined with drugs that increase hunger resulted in more instant gratification and weight gain.
It is only when my health improved, I could realise the error in my ways and started losing weight again, first by stopping stress-eating and then by portion control.
The point of this monologue is that, unless the root cause is treated, instant gratification, be it spending or eating is hard to control.
If we are spending more because of a stressful life, then we need to focus on reducing that. However, many of us are often too stressed to realise that decisions are being made without enough thought behind them.
Emotional releases are healthy and necessary. The means adopted should not cause long-term harm. That is the key. In order to realise this, we need to pause and introspect. That often happens with a lucky break. The lucky break itself happens only when stress reduces! The vicious circle has to be broken.
What do you think? Have you seen people engage in emotional spending? Share your thoughts on how this can be handled.
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video! ⇐ More than 1000 investors and advisors use this!
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