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December 4, 2020

The psychological triggers that lead to spending

If any year could make even the most well-intentioned budgeters fall prey to emotional spending, it would be 2020. So, if you’ve spent a little more than you wanted to and have about 3 more pairs of sweatpants than you started the year with, those purchases are probably exactly what you needed at that time. However, it’s important to identify and be conscious of spending ‘triggers’ that cause you to give in to spending temptations. By knowing these triggers, you’ll be able to spend on things and experiences that truly bring you joy and have a purpose in your life.

What are spending triggers?

Spending triggers are psychological impulses that subconsciously impact your money decisions. You might be trying to replace or amplify an emotion you’re feeling at the moment and make a spontaneous purchase even though it doesn’t fit into your life or long-term plans.

Different people have different triggers. Some people are triggered when they’re happy and had a really good day. They might want to celebrate and treat themselves. Some people get triggered when they’re having a really bad day. They might want to reward themselves for making it through another tough week. The same person may get triggered both when they’re really happy or really sad, so the trick is to really understand your impulses caused by times of high emotion or stress.

Just as a reminder, there is nothing inherently wrong about any of these feelings and your money is only a tool that allows you to accomplish your goals. The reason for knowing these triggers is so that people don’t just use spending as a band-aid solution to bigger changes they need to make in their lives. If you ever feel buyer’s remorse after a purchase or only feel elated for a short period of time after getting that thing you really wanted, it might be a sign that spending money is not what you needed to do at that moment. Here are some more spending triggers to be aware of and avoid:

Scarcity: Our brain is hardwired for competition. When there’s a huge sale going on or you see that there’s only a limited number of something, your brain wants in. This can lead you to buy things that you didn’t really want or can afford, especially if a peer already has that item.

Solution: You really have to train your brain to disassociate shopping from a game or a competition. The only winner in this scenario is the retailer – you don’t get to ‘win at shopping’ especially if you purchased something you didn’t need. In the meantime, unsubscribe from the flashy emails and daily sales reminders that bombard your inbox.

Stress: Are you more likely to use shopping as a release if things aren’t going well at work? You might be spending simply as a way to remove yourself from a stressful situation, if only for 20-30 minutes. Whether you roam around Target or have various tabs open in your internet browser, using shopping as a means of escape is all too common in our high-stress world. Additionally, many ‘health and wellness’ websites are just portals to more online spending, and self-care has simply become a tag-line for businesses to push more products.

Solution: You should not need to spend more money in order to relax yourself. Whether you’re eyeing an adult coloring book or a massage gun, having more stuff will not help you escape and might even add on financial stress and debt to your list of worries. Instead, create a list of hobbies and activities that cost nothing and help you relax, and keep the list in your planner or another easily accessible location. Ideas include: taking walks, volunteering, calling a friend, deep-cleaning, watching a movie, and more.

A need to please: People whose love language is gift giving too often fall into the trap of equating spending to love. Their purchases are rarely about the item itself but instead about the emotional importance they attach to the act of giving the gift. When people buy to please others, they tend to overspend because they’re not thinking about their finances. In fact, they may even trick themselves into feeling good about how their relationships mean more to them than money.

Solution: Through almost no fault of our loved ones, we sometimes attach meaning to the act of giving and receiving gifts. A solution might be to institute a ‘no-gifts’ policy this holiday and refocus your attention to showing your family and friends how much you care for them in other ways. Some creativity might be in order, but maybe this will encourage your friends and family to create their own ‘no-gifts’ activities.

Immediate gratification: A study by two MIT professors found that customers are willing to pay more for the same item when using credit rather than cash. The reason this likely happens is because spending on credit feels really, really good in the moment without the pain of parting with cash. However, this leads to a spiral of credit card debt, interest payments, and generally feeling a loss of control in your financial situation.

Solution: We are almost always fully capable of rationalizing our purchases in the moment, but the true test of a good purchase is that it’ll make sense months or even years from now. If you’re considering purchasing something, try to delay the purchase by a month. If you still want that item in a month, you may actually use it for a very long time.

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