4 Ways Stress Is Killing Your Finances

By Dan Rafter on 29 December 2015 0 comments

You work too much. You don't sleep enough. You're trying to run a busy household while also earning enough money to pay your bills each month. Put simply, you're stressed — and that can lead to bad financial habits. The good news? You can overcome stress-induced spending. It just takes a bit of planning.

Anthony Criscuolo, a certified financial planner and portfolio manager with Palisades Hudson Financial Group in Fort Lauderdale, FL, says that a plan — really, a budget — is the best way to avoid overspending as a way to reduce stress. If you create a budget reserving, say, $200 a month for new clothes, you'll be less likely to spend $600 this month on other impulse buys.

Besides creating a plan, it helps to recognize some of the most common ways that stress-induced spending can torpedo your finances. Here are four ways that this kind of overspending can ruin your monetary health.  

1. Spending as a Reward

You’ve had a stressful day. A quick stop at Starbucks or a trip to the mall should make you feel better, right?

It might… briefly. But when your credit card bills are due or your checking account hits rock bottom, that big spending spree or those frequent trips to the coffee shop don't look quite as appealing.

If you find yourself heading for a shopping spree to forget about your stress, stop yourself. It's better to tackle the reasons for your stress. Maybe you're trying to do too much. Maybe you're not getting enough sleep. Whatever the issue, you need to make the changes that will keep you from turning to spending as a reward for getting through another stress-filled day.

2. The Extravagant Vacation Bonus

We work a lot in the United States, often at high-stress jobs. So when it's time to take our two weeks off, we want to tackle an extravagant vacation. It's our reward for so much hard work, right?

It can be. But only if you save throughout the year so that you can pay for your vacation before you head for the airport. Too often, we put our vacations on our credit cards. Then, when the trip is over, we're faced with a big bill. That only adds to your stress, instead of alleviating it.

If you can't save for a big vacation, take a smaller one instead. Sure, a weekend trip to the nearest water park might not be as memorable as a two-week stay in Paris. But until you can afford that bigger vacation, resist the urge to splurge on one.

3. Falling Down the Click Hole

Nicole Lapin, former anchor at CNN and CNBC and now the money-saving correspondent for The Wendy Williams Show, warns consumers of the online rabbit hole. It's easy to visit Amazon and start clicking away for new mittens, hats, and electronics — far easier than traveling to a brick-and-mortar store to do your shopping.

When we're stressed, it's easier to turn to online shopping, Lapin says. And online shopping, in turn, makes it easier to overspend.

"There is this binge cycle of online shopping that comes up so often when we are stressed," Lapin says. "There are a lot of temptations online, that cookie trail of pop-up ads of products you looked at once but never bought. That is genius marketing to get you to spend. Resist it."

4. The Drip-Shopping Method

Online shopping can lead to another stress-related bad habit: Instead of buying everything you need at once — whether you're shopping for the holidays, birthday presents, or for new furniture — you might be tempted to make a purchase today, tomorrow, and the next day. This leads to overspending, explains Criscuolo. The more often you log on, especially when you are stressed, the more you'll tend to spend.

Criscuolo recommends completing your online shopping in one longer visit. This way, you see all at once just how big that checkout cart really is.

What are you doing to control your stress — and your finances?

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