Taken together, money and spending are pretty influential subjective concepts. Ever noticed that when you’re shopping, your emotions get the better of you? Your shopping could very well beat the hell out of your logical reasoning cold.

This happens when you can’t stop the urge of using little plastic cards to purchase some things that aren’t necessary, or you make an impulse buy, you create debt out of a prolonged payment scheme that feeds you with (hidden) interest rates, etc.

You know when emotions control your spending when you’re trying to use the money to buy your way out of your helplessness. So be careful of those times when you’re unhappy, bored, stressed out, or desperate.

old man, money, safe
Yes, an old man sitting on his open safe has money issues. Or maybe I just can’t find an appropriate pix for this blog

It’s also equally dangerous if you use the money to buy your way in to enhance your self-worth. So you should also be careful with your spending when you’re happy. Chances are, you’d buy things haphazardly; and you end up draining your pockets and ruining your financial plans.

In short, emotional spending happens when you’re trying to:

  • Feel good about yourself. “I’ll be happy when I’m wearing that watch!”
  • Eliminate or reduce stress
  • Raise your self-esteem
  • Create barriers against loneliness

It’s hardly surprising, then, that psychologists are consistent in their findings that link people’s spending habits with their sense of well-being.

Ironically, individuals who succeeded in their savings and investment goals first had to come to grips with the principle that their money is not who they are. This is consistent with another set of studies that show that people with high self-esteem rarely commit emotional spending and impulse buying.  

So here’s the cold, hard fact: You won’t be able to succeed in your financial goals if you don’t work with your emotional spending habits. Deal with the psychological aspects first to get to the root cause of the problem. Look closely at what money means to you. Examine your behavior when you interact with money. What attitudes and beliefs do you carry about money?

In the end, you really have to believe that money (whether you have lots of it or not) doesn’t define who you are.

Your self-worth is not quantifiable by any banknote!

You really, really have to believe this—for there is no other way.

If you succeed, you cut your psychological attachments to money (which blinded you on how to spend it wisely), be able to approach it objectively, understand how they work, and make more.