Pattie Lovett-Reid: The dangers of emotional spending
Regardless of your income, emotional spending can be hazardous to your financial health. To be fair, it is okay to splurge on yourself from time to time especially if you can afford it. You have earned the right.
However, if you are continuing to spend more than you like on non-necessities and struggling to make ends meet, you need to take a few concrete steps to stop the financial drain. Sure, you may paid off your mortgage and have investable assets, but as Mike Newton, director and portfolio manager with Scotia Wealth Management, said on BNN Bloomberg Wednesday, before you think about splurging on a few things, have you thought through your retirement?
It is an unfunded liability so you might want to curb that spending.
Here are a few ideas on how to find a balance between saving for your retirement and spending wisely:
1. Own your spending habits. Tell those closest to you that you’re trying to change your behaviour. Begin by putting a sticky note in your wallet as a reminder to shut your wallet
2. Acknowledge the problem. Compulsive spending is no different than other dependencies that can be harmful. The endorphin rush will not last and you may need help to deal with the addiction. Be honest and get the help you may need.
3. Block retail ads from your email and unsubscribe. Prevent yourself from getting unsolicited offers and reduce your exposure to advertising that can be tempting.
4. Get new hobbies. Shopping has become a national pastime but it doesn’t have to be. Make changes to the structure and orientation to your day and find alternative activities to fill your time.
I get it – retailers and the economy need you to spend and the goal isn’t to shut down shopping completely. I’m suggesting we become more aware and conscious of what we are doing with our money. It is all about having control over your finances, rather than have your money control you. You want to enjoy the purchases you’re making rather than dealing with regret associated with mindless, emotional spending.