Personal Finance

Does Retail Therapy Really Help?

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If your first reaction after a bad day is to go shopping, you’re not alone. Almost 40% of Americans say they practice retail therapy as a coping mechanism to feel better. And while we all participate in a little “treat yourself” mentality every once in a while, retail therapy can quickly become a slippery slope into money problems.

Why does retail therapy make you feel better?

It varies from person to person, but generally speaking, it’s psychologically rewarding to spend money.

To put it simply, the cycle of rewarding yourself – in this case, purchasing something – gives your brain a hit of dopamine. Humans are wired to seek out things that make us feel good, so the more often you spend when you’re feeling down, the more likely you’ll associate spending with feeling better.

Alongside that, one study that was done on the benefits of retail therapy hypothesized that shopping gives the spender a sense of control and choice – both of which help to alleviate sadness. Shopping also serves as a great distraction from worries on your mind, as the positive potential of the item takes over your imagination.

Given all that, it makes sense why so many people use retail therapy as a coping mechanism. But even though emotional spending makes you feel better in the moment, that temporary reward doesn’t outweigh the consequences of consistent spending on things you don’t need. If you’re finding that your spending is surpassing your typical budget, it might be time to reconsider how you cope with a bad day.

How do you quit retail therapy?

A good rule of thumb if you’re struggling with retail therapy is to check in with yourself.

“The question, "Do I really need this?" is an amazing question because there are five hidden questions in that one question.

DO I really need this?
Do I really need this?
Do I REALLY need this?
Do I really NEED this?
Do I really need THIS?”

Derek Hagen, Financial Therapist, at Money Health Solutions

Putting emphasis on a different word of the question forces you to confront why you’re really buying.

If you’re still struggling after asking yourself those five questions, we have a few more tricks up our sleeves. Here’s how to curb your emotional spending so you don’t add financial stress on top of your other worries.

1. Put It in Your Cart

Seriously, put all the items in your cart. Just don’t hit purchase.

Remember what we mentioned about the reward system? Turns out, your hit of dopamine doesn’t come from the actual purchase – it comes from the anticipation of the reward. That means the next time you have an urge to shop, stop yourself before you buy. You may find you experience the same level of satisfaction and relief as you would if you were to actually hit purchase.

2. Wait 48 Hours

Struggling to not buy? Try the 48-hour rule.

Retail therapy is used to cope when your emotions are down. Odds are high that two days later, you’ll be feeling much better about whatever caused your distress, and you won’t need to make that purchase anymore to cure your sadness.

3. Set a Spending Budget

Cutting out all shopping entirely isn’t a reasonable ask, especially when you’re first trying to curb your spending. Retail therapy can provide benefits as long as the amount spent doesn’t surpass your budget. However, 50% of Americans don’t actually have a budget when they spend. Don’t make the same mistake.

“Taking a yearly savings goal and breaking it down into a weekly spending budget allows you to manage your finances in a practical way. You can spend on discretionary items knowing that you’re still saving for your long-term goals.”

Michael Boggiano, Managing Partner at Wealthcare Financial

If budgeting isn’t your strong suit, try using a free online tool that can automatically categorize your spending once you link your accounts. That way, you get a holistic view of your funds and purchasing behavior – and can make smarter money decisions.

4. Use a Cash-Back Card

You’ve got the budget set, now earn rewards on your purchases.

If you know that you’ll continue to make emotional purchases, get a card that gives you cash back on your transactions. That way, you get rewarded for spending money you would have spent anyways. Pro tip: Cash-back cards are better because they guarantee you cash . Point-based rewards cards can switch up the value of certain rewards at any time.

5. Find a New Coping Mechanism

At the end of the day, retail therapy works because it gives your brain dopamine. If your expensive habit is getting out of control, you may need to address the root cause of your emotional spending.

“Noticing common thoughts, emotion, and triggers that lead to over-shopping is key.”

Dr. Alex Melkumian, Psy.D, LMFT, at Financial Psychology Center

To help limit your shopping, try experimenting with other activities or methods that give you that same feeling of satisfaction.

Let’s say that every time you go on a run, you immediately feel better – no matter what mood you were in before. Next time you get the itch to shop, try going on a 5-minute run instead and see if the urge disappears. Find a solution that works best for you – perhaps it’s watching a show, calling a friend, or writing in a journal. Whatever your new coping mechanism is, just make sure it’s safe and free.

Treat Yourself (Every Once in a While)

It’s not a bad thing to treat yourself to a purchase occasionally; that’s what makes life fun. As long as you don’t let your emotional spending out of hand, we won’t judge if you order your cat a knitted hat after a stressful day Test.

Does Retail Therapy Really Help?

This blog was published by Axos Bank on July 13, 2022, and last updated on July 13, 2022.

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