We all have to work to earn money. Money pays for the homes we live in and the food we eat, it also helps to look after our families and build security for the future. But this isn’t always easy to do, especially if you’re the sort of person who tends to spend on impulse. Emotional spenders tend to save less both in the short and long terms, and have more financial issues. 

In this article we look at some of the ways emotionally can affect our spending and saving decisions and what can be done to alter these habits. The bottom line is that you need enough money to support yourself and your family, beyond that there is no need to spend or worry about how much you have or don’t have. 

 

SELF RESTRAINT 

 

When it comes to spending there are two schools of thought. There is the rationalist approach and the emotional approach. Rationalist spending tends to value security and long term planning, whereas the emotional type often spends on impulse, making in-the-moment trade-offs. 

 

If you want more control over your spending you need to be more aware of your spending traits and how they impact your budget. If you make a lot of unqualified purchases you might not feel in control of your money. This is a dangerous scenario. Finally, always be aware of your state of mind when shopping, distraction or intoxication often leads to spending more.

 

A TEMPTING ENVIRONMENT 

 

If you have a problem with alcohol it’s probably not a good idea to live above a bar or near a shop that sells low price alcohol. Similarly, if you find that your budget is being impacted by unqualified spending, you might find there are aspects of your environment that support and encourage your spending. 

 

In the modern world this is virtually guaranteed since most marketing practices are developed to encourage spending. Targeted advertising, for instance, will present you with the very thing you were thinking of buying. Consider your environment and the cues that part you from your money, then take steps to avoid them. 

 

EMOTIONS AND MONEY 

 

Money worries are very common. Regardless of how much money a person earns or saves there is always some form of money stress that impacts your life. In reality, this is more to do with your perception of money rather than the real life impact of it. 

 

Gambling is a good example. People who gamble for entertainment gain some enjoyment from it, they play a game and don’t mind losing some money. Past a certain point, however, it may get more stressful, but it still won’t become a real problem, unless they’re about to lose everything. Consider your bottom line, be honest about it. 

 

THE CHECKING ACCOUNT 

 

The most common type of account people use is a checking account. These are very liquid accounts that allow you to deposit and withdraw your money easily. They also offer some interest on the money you keep there, but for savings and money management you can do a lot better. 

 

Although it might seem easy and straightforward to keep your money in a basic checking account the interest you receive is a fraction of what you could get. Having a checking account is important but subdivide your money and find an account for it with better rates

 

CASHLESS SAVINGS 

 

For better or worse the world is heading in the direction of a cashless society with more investment in cashless enterprise and some countries such as India discontinuing 80% of its cash. There are pros and cons to going cashless but from a personal perspective it does offer some extra opportunities for saving.  

 

Online accounts that deal only in cashless transactions often give you better interest rates by virtue of lower infrastructure costs. Additionally, cryptocurrencies and other new investment opportunities give you more opportunities to save and invest without cash. When thinking about the future of money, cashless savings are sensible. 

 

LONG TERM INVESTMENT 

 

If you’re an emotional spender you may not have a great deal of savings. Depending, of course, on your levels of emotional restraint. It’s entirely possible to be an emotional spender but still stick to your bottom line ethic. Still, the chances are that you treat savings the same way you treat liquid cash. 

 

However, long term savings are a way of accumulating wealth over time. Even a moderate investment using green loans or with a tax free savings account will advance your wealth and provide you with added security. To achieve this you may need to shift your mindset a little, and think of accumulating instead of earning. 

 

CHANGING HABITS 

 

Often, our spending habits are driven by our emotions. Some people buy things because it fills a gap in their emotional life, others feel a spending impulse when they see an item or when they are in a particular situation. The easy thing to do is to go with your emotional gravity, but there are a few ways to change these habits and save more money. 

 

Understand that your desire to remove the plastic from your wallet and punch in the numbers is the result of several stimuli that motivate you. It could be hunger, or the desire to look and feel a certain way in the near future. But there is always an alternative to the action you want to take. Explore those alternatives before hitting the Buy Now button. 

 

THE COST OF SPENDING 

 

Although spending is a transaction, an exchange that barters your time for a desirable object or experience, there are more costs associated with the practice of spending than you might think. In the modern work we are so used to working, earning, and spending, that we rarely stop to consider the emotional sense of these dynamics. 

 

We find ourselves in this commonly accepted myth about how things work and it becomes habitual and automatic. Since we sacrifice our time for money we think we should get something in return. Often that is experiences, assets, or items. In reality, there is no need to spend the money. Spending it also reduces the interest it can accrue.