How To Stop Impulse Buying

How many people have told you that you have a shopping problem? 

Well, there’s actually evidence that there are scientifically proven benefits to swiping your credit card. 

Can buying that extra pair of shoes actually be good for you? Retail therapy might just be more therapeutic than you think.

The Meaning of Retail Therapy 

Let’s start with a simple definition of retail therapy: 

Buying things based on emotion, not need or value 

Typical consumers will say that need, value, or usefulness tend to be the primary motivations behind their buying decisions. On the other hand, according to the Cleveland Clinic, “compulsive buyers make purchases in order to improve their mood, cope with stress, gain social approval/recognition, and improve their self-image.” 

But is buying things based on emotion necessarily a problem? We know of many aspects of human nature that would be considered economically irrational, so can this be one of those things? Well that depends. If it’s controlled, and if you can afford the expense, then go for it! 

There’s even neuroscience that supports the notion that retail therapy can be exactly what its name says it is: therapy! 

The Psychology Behind Retail Therapy

Retail therapy is driven by two primary psychological factors:

1. Emotional Triggers: Situations where one feels a lack of control over their environment can often lead to retail therapy. The Cleveland Clinic points out that stress relief and social approval are common triggers. These emotional states can prompt someone to start browsing online shops or visit a mall as a form of escape or comfort.
2. Gratification and Dopamine Release: The act of shopping, or even the anticipation of it, can trigger a neurological response – a release of dopamine, known as the "happy hormone." Dr. Scott Bea from the Cleveland Clinic notes that the mere act of browsing or window shopping can uplift one's mood due to the anticipation of a possible reward. This dopamine release increases the desire to continue seeking out feel-good experiences, which is why retail therapy is often a go-to solution for many.

But when does retail therapy cross the line into addiction? 

Shopping addiction goes by many other names such as oniomania, compulsive buying disorder (CBD), buying-shopping disorder (BSD) and pathological buying. 

Let’s call Retail Therapy the simple, one-time act of buying something based on emotion. These other names, including impulse buying, are repeated events that start to become problematic. This is when a person loses control of those psychological drivers. Unlike the occasional emotional purchase, these repeated and uncontrolled buying behaviors can become problematic.

Am I a Shopaholic?

It's important to recognize when shopping habits turn problematic. Signs of a shopping compulsion include:

• Facing financial challenges due to uncontrolled shopping.
• A preoccupation with buying unneeded items and struggling to resist the temptation.
• Spending excessive time researching items, necessary or not.
• Experiencing disruptions in work, school, or home life due to out-of-control spending habits.

Understanding these psychological aspects can help in recognizing when retail therapy is harmless and when it may be a sign of a deeper issue.

Problems Associated with Retail Therapy & Impulse Buying 

It is estimated about 5% of American consumers exhibit compulsive buying behavior (Cleveland Clinic), though I have seen much higher estimates. The most obvious problem is that an uncontrollable shopping habit can lead you into debt, particularly when it's credit cards that fuel that shopping habit. According to the Champlain College Center for Financial Literacy 2023 National Report Card, 79% of US Adults have a credit card. However, 43% engage in “costly behavior.” These costly behaviors include being charged an overlimit or late fee, receiving a cash advance, exceeding a credit card balance, and/or making only the minimum payment on the card. Basically, anything where you’re spending money on fees or interest as a result of overbuying. The combination of impulse buying and credit cards can lead to significant financial difficulties. 

At the Cleveland Clinic, Dr. Bea says this condition has a lot in common with other impulse control disorders like sex addiction and gambling addiction. 

People at risk are often: 

• Constantly wanting something new
• Easily bored
• Pessimistic
• Dependent on social recognition or approval
• Secretive or guilty about purchases
• Dealing with co-occurring mood disorders, anxiety disorders, eating disorders, or impulse control disorders

Retail Therapy: Is it really that bad? 

There is also evidence that retail therapy might not be all bad. Once again quoting Dr. Scott Bea, “Research suggests there’s actually a lot of psychological and therapeutic value when you’re shopping — if done in moderation, of course.” A 2014 study from the Journal of Consumer Psychology found that retail therapy not only makes people happier immediately, but it can also fight lingering sadness.  2014 study by University of Michigan showed that purchasing things you personally enjoy can be up to 40 times more effective at giving you a sense of control than not shopping. 

So maybe there is a time and place for Retail Therapy. But it can clearly reach problematic levels. 

How to stop impulse buying 

So it’s clear that the dopamine release associated with spending can provide some scientifically proven benefits, but it’s also clear that there is a tradeoff between healthy spending and unhealthy spending. 

Here’s a few tips on how to walk that line: 

Learn Financial Literacy 

Individuals with low financial literacy spend 10 hours a week stressing over money—that’s a part-time job! Elevating your financial knowledge is a crucial step towards regaining control and reducing stress. People who understand financial literacy are almost twice as likely to navigate their finances with ease, empowering them to avoid impulse buying. 

Recognize Your Triggers

Now that we understand that shopping releases a dopamine release, which is essentially what we’re seeking to find after an emotional trigger, we can also look for other sources of dopamine release. A few examples include things like yoga and meditation, exercise, laughing, dancing, and even sunlight.  

Benefits of Mindful Spending 

'My Money' spending is spending on things that make you happy. It’s the discretionary part of your budget, where you decide how to allocate funds based on your personal preferences, goals, and lifestyle choices. It’s unique to you, whether it's traveling the world, pursuing higher education, or even supporting causes you care about. 

My Money spending, which can also be called “discretionary spending,” is essentially empowered spending. For more guidance on finding this empowerment, check out our email series on the psychology of money. 

Money is not just a means to an end; it's a resource meant to be enjoyed. It's about embracing the possibilities that money brings – seeing every decision, whether it's spending or saving, as an opportunity. This perspective doesn't just focus on accumulation but also on the enjoyment and strategic use of financial resources.

If you’re a fan of retail therapy, there’s another route to consider. It can also be psychologically therapeutic if you save up for that reward rather than buying something immediately with a credit card. Applying the theory of anticipation, saving up for your reward gives you something to look forward to, which creates excitement and a release of dopamine over time.

Four Ways to Enhance Mindful Spending 

1. Come with a plan using SMART Goals: Setting goals is not just about dreaming; it's about creating a clear roadmap for your financial journey. A highly effective way to set goals is by using the SMART framework. SMART stands for:

• Specific: Goals should be clear and specific, so you know exactly what you're aiming for.
• Measurable: Include precise amounts, dates, or other measurable details to track your progress.
• Achievable: Ensure your goal is attainable and realistic, given your current resources and constraints.
• Relevant: Your goal should align with your broader financial objectives and personal values.
• Time-Bound: Set a deadline. A time-bound goal creates a sense of urgency and helps focus efforts.

This framework transforms vague aspirations into concrete targets, making it easier to plan and achieve financial success.

2. Assess the alternatives 

Consider experiences over things. Give yourself inspiring experiences, quality time with others or personal growth perks as rewards. These create meaningful memories without derailing budgets.

3. Implement cooling off periods 

If you think that your tomorrow-self or your next-month-self will regret or feel indifferent to a purchase, then consider skipping it.

4. Embrace My Money 

To wrap up, our journey through the world of retail therapy reveals a complex interplay of emotion, psychology, and economics. It's not just about buying; it's about understanding why we buy. By embracing financial literacy, recognizing our triggers, and prioritizing mindful spending, we can transform our shopping habits into a source of joy rather than a cause for concern. Let's shop smart, spend wisely, and enjoy the benefits of thoughtful consumption.

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