Notes on emotional spending

Published: July 22, 2016 at 10:22 am

Last Updated on

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.

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Credit: Bernard Goldbach

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.

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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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About the Author

M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Linkedin
Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. For speaking engagements write to pattu [at] freefincal [dot] com

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7 Comments

  1. There is another point too. Trying to control the symptom of stress (spending, eating, etc.) can actually further increase the stress levels!

  2. Puttu Sir,
    Could you please review the Mutual funds like Kotak World Gold Fund & DSP BlackRock World Gold Funds, I am not able to understand how come these fund generated return of >93% in a year.

    1. 5 ka double kitna hota hai 10 na. So it means the price has appreciated 100% simple . So in case of KOTAK NAV was 6.153 so due to uncertainity and remember China fever Equiy markets crashed & Gold being safe heaven got increased. so NAV reflected all this i.e 13.369.

      If I am wrong dont worry Pattu sir will correct me .
      Cheers

  3. Emotional spending really induces a ‘feel good’ effect. The other contributing factors for indiscriminate spending are – availability of extra funds, absence of a concrete goal or a liability, year-round sales in the malls and a misplaced optimism that the salary will always be there with increments! And, if you try to impress that one day the salary may not be there, that definitely gives stress which will make one spend more. Let me buy when I can afford is the philosophy!

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