The Art of Budgeting:Conquering Emotional Spending with Budgeting

Budgeting Strategies for Emotional Spenders (PART 2)

Welcome back to our discussion! Last week, we talked all about distinguishing between your needs and wants and the importance of that distinction. Following that, we spoke of the importance and necessity of tracking our expenses. Now, in part 2, we will explore the second strategy, which involves developing emotional intelligence to enhance our financial well-being. We will also conclude by recommending some useful apps for you to try out. Let’s dive right in together!

Strategy 2: Improving your Emotional Intelligence

When it comes to managing our finances, we often focus on numbers and budgets. However, an often overlooked but crucial aspect of financial well-being is emotional intelligence. Let’s take a look at how it relates to spending and how it can empower us to make smart financial choices.

• Awareness of Emotional Triggers

Emotional intelligence involves being aware of our emotions and recognising how they influence our behaviours, including our spending habits. By developing self-awareness, we can identify emotional triggers that prompt us to engage in impulsive or excessive spending. Whether it’s stress, boredom, or social pressure, understanding these triggers enables us to respond more consciously and make intentional spending decisions.

• Differentiating between Needs and Wants

Emotional intelligence helps us differentiate between our genuine needs and our wants which are driven by momentary desires or emotional impulses. This ability to discern helps us avoid impulsive purchases and prioritise spending on essentials rather than succumbing to fleeting wants.

• Managing Impulse Buying

Emotional intelligence plays a key role in managing impulse buying tendencies. It equips us with the tools to pause and consider the consequences of impulsive purchases. By practising emotional regulation, such as delaying gratification or finding healthier outlets for emotions, we can reduce impulsive spending and make more deliberate and mindful choices aligned with our financial goals.

• Cultivating Delayed Gratification

Delayed gratification is a fundamental aspect of financial success. Emotional intelligence helps us cultivate patience and resist immediate gratification in favour of long-term financial rewards. By managing our emotions and understanding that short-term sacrifices lead to greater financial stability and future fulfilment, we can make wiser spending decisions and prioritise saving and investing.

• Building Resilience and Coping Mechanisms

Emotional intelligence enhances our resilience and equips us with effective coping mechanisms for dealing with financial challenges. By developing emotional regulation skills, we can navigate setbacks, financial stress, or unexpected expenses without resorting to impulsive or irrational spending. This resilience enables us to stay focused on our financial goals and make sound decisions even in challenging circumstances.

When we understand and regulate our emotions in relation to spending, we take control of our financial lives, reduce stress, and move closer to our long-term financial goals.

Another strategy is to have an accountability partner like a spouse or a really trusted friend that you allow to take part in your journey. For example saying “I will not spend more than $200 without discussing it with my partner.” This keeps you in check so that you will realize your ultimate goals.

SHARON PHILLIPS, CPA, MBA | Partner – KASP Accounting and Estate Planners | http://www.kaspaccounts.com

Finding Other Coping Mechanisms 

It’s all too easy to prioritise our wants over our needs, especially when seeking emotional comfort or instant gratification. However, by finding healthy coping mechanisms, we can break free from this cycle and make more mindful decisions that prioritise our long-term financial well-being. 

• Engage in Mindful Activities

Instead of turning to shopping or spending as a coping mechanism, explore mindful activities that bring you joy and relaxation without the financial burden. Engage in hobbies like painting, gardening, writing, or playing an instrument. These activities can provide a sense of fulfilment, boost your mood, and divert your attention away from impulsive spending.

• Practice Self-Care

Self-care is essential for overall well-being, and it doesn’t have to involve spending money. Prioritise activities that nourish your mind, body, and soul, such as practising meditation, taking relaxing baths, going for walks in nature, or spending quality time with loved ones. By focusing on self-care, you can address emotional needs without resorting to unnecessary spending.

• Build a Supportive Network

Surround yourself with a supportive network of friends and family who understand your financial goals and can provide encouragement and accountability. Share your aspirations and challenges with them, and seek their advice when you’re tempted to prioritise wants over needs. Having a strong support system can help you stay on track and find healthier coping mechanisms in times of emotional distress.

• Engage in Physical Exercise

Physical exercise is not only beneficial for your health but also an excellent outlet for stress and emotional tension. Whether it’s going for a walk, a run or attending a fitness class, engaging in regular exercise can release endorphins, boost your mood, and alleviate the urge to spend impulsively. Make physical activity a part of your routine and experience the positive impact it has on your emotional well-being.

• Seek Emotional Support

Sometimes, our desire to prioritise wants over needs stems from deeper emotional issues. If you find yourself consistently using spending as a coping mechanism, consider seeking professional help from a therapist or counsellor. They can provide guidance and support in understanding and managing your emotions, helping you develop healthier coping mechanisms that don’t compromise your financial stability.

It’s essential to address emotional needs in a way that aligns with your financial goals. Embrace these alternative coping mechanisms and witness the positive impact they have on your financial journey and overall well-being.

Tools/Apps/Resources for Tracking Your Spending

When it comes to tracking your spending, there are various tools, apps, and resources available to help you manage your finances effectively. Here are some options:

• Toshl Finance 

Toshl Finance is a popular expense tracking app that allows you to record and categorise your expenses, set budgets, and track your financial goals. 

• MoneyCoach 

MoneyCoach is a budgeting and expense-tracking app that helps you keep tabs on your spending. It allows you to set budgets, track expenses, and view spending insights. 

• Expense Manager 

Expense Manager is a simple and intuitive expense tracking app available for Android devices. It lets you categorise expenses, set budgets, and generate reports to get a clear overview of your spending. 

• Mobile Banking Apps

Many banks offer their own mobile banking apps that include features like spending summaries, budgeting tools, and notifications for account activity. Check with your local bank to see if they have a dedicated mobile banking app.

• Excel or Google Sheets 

With Excel or Google Sheets you can create your own expense tracker, customise it to suit your needs, and input your spending data manually. You can categorise expenses, create formulas for calculations, and analyse your spending patterns.

“It’s not an issue of Wants vs. Needs. It’s an issue of Wants vs. Priorities.” – Jamie Munson