Can technology help us manage emotional spending?

Have you ever bought something you don’t really need? Maybe something you don’t even really want? Some spontaneous Percy Pigs at check out? A new jacket after a bad day? New books that you don’t have time to read but bought because you felt a need to buy something even though you don’t entirely know why?

Personally, I’ve done all these things. Making purchases when I was stressed, lonely, bored or under-appreciated used to be quite commonplace. Especially when I worked right next to a Waterstones and honestly couldn’t resist going in almost every lunch break. I’ve also gone out and spent simply because I was happy. After getting a promotion or coming back from a brilliant holiday, there have been times where I’ve chosen to treat myself.

And you know what? All of this is ok. To a point.

There is nothing wrong with buying yourself nice things. There is nothing wrong with a little retail therapy, no matter what the magazines might say.

Given that money is inherently emotional, it’s no wonder that we use it to give ourselves a boost or remind ourselves that we’re in control or that we’re worthy. Living in pandemic times, it’s also totally understandable that your emotions may well be heightened and finding ways to comfort or treat yourself is an entirely valid response.

But sometimes emotional spending can become a bigger issue, particularly if it’s causing issues with things like paying off credit cards or becoming stuck in an overdraft. In this case, it might be time to consider how you can recognise the emotional triggers and curb the spending so that you can maintain your financial wellbeing.

A first step may be to consider practicing some more mindful money habits — challenge yourself to stop before impulse buying and instead ask yourself whether you really want something before adding it to your basket. You can try setting intentions to help you confirm your goals and ambitions, focusing on these needs instead of immediate short-term wants.

You can also think about using technology to track your money, set reminders and goals, create budgets and lists, and even offload some of the cognitive and emotional burden of managing your finances onto reliable external devices.

The changing role of technology

The technology we have today is a huge resource that we all use to some degree to power our lives. This is particularly the case with smartphones, which have grown so far past their original purpose as a calling device to become all-purpose mini-computers that can remember dates, directions, schedules, bills, and obligations with only tiny inputs from ourselves.

One of the great benefits of smart technology is also the visibility it affords us — we can find anything with a few taps, check our diaries or accounts all from our phone.

Likewise, it is visibility that helps us to track and manage our emotional spending. Mobile banking, and saving and investing apps, for example, all let us see more precisely where our money is going as well as where it can grow. When making financial plans and setting goals, it lets us see how well we’re sticking to our budget, predict problems, reveal extra places we can save, and so on. In turn, this enables us to avoid behavioural biases, such as overconfidence or risk-anxiety.

“Being able to see your money all in one place is empowering,” says Maurizio Kaiser, co-founder at ikigai. “Not just with your day-to-day spending, but when it comes to your savings and investments too. When you’re able to offload the admin and easily see, track and manage your money, you’re also able to really think about what’s the right financial decision for you. You can make choices with confidence. There’s a level of insight that comes with greater visibility that helps you feel informed, aware and in control.”

Extended Mind Theory

An interesting (albeit slightly wild) concept to consider is extended mind theory.

In a nutshell, some theorists, like Andy Clark and David Chalmers, argue that we’ve started using our phone, and particularly the apps on them, as external parts of our memory. Technology in this sense acts “like outer extensions of the mind letting us store and retrieve data not encoded in our neurons … these apps do more than help us remember. They also help us process information.” This is based on the philosophical theory of Extended Mind, which posits that technology quite literally extends the mind into the world. It’s a fascinating concept and not hard to believe as we all do — to some degree — rely on our mobile phones and smart devices for a huge number of daily tasks, including memory.

In terms of emotional spending, the idea is that if you have a reliable device that you regularly use for cognitive tasks, then you are a ‘coupled system’. This allows you to essentially delegate some of the less fun and more stressful tasks to your device — like reminders about outgoing bills, notifications when you drop below a certain amount of money in your account, or helping you work out how much money you need to save into a goal in order to reach it in a certain time frame.

The extended mind provides a theory for why it’s possible for us to use technology in a way that supports our mental and financial wellbeing. It’s a concept that demonstrates why we can reliably use our phones and apps to stay in control of our money and build healthy financial habits.

Staying tech aware

Of course, technology has its pitfalls. Whilst much of it is designed to make our lives easier — apps are also designed to be highly addictive. Encouraging us to scroll endlessly, we can lose hours to our screens without realising. Social media has been linked to our increasing need for instant gratification (as well as an over-reliance on inaccurate information). And some studies have suggested that digital addiction, stress, anxiety, loneliness and depression are all intertwined.

Given that personalisation algorithms are built to feed us things that we’re meant to want and which appeal to our emotional needs, it can be tricky to stay on top of our spending. The ease of e-commerce and machine learning-driven systems can encourage us to impulse shop. Likewise, they can impact our saving or investing choices too, driving us to make riskier financial decisions than we may actually be comfortable with.

The thing is emotional spending isn’t something to be ashamed of — we all do it — and technology really can support our financial wellbeing.

As Edgar de Picciotto says, “Tools like ikigai can help you understand your money in a different way, with simple things like being aware of your own appetite for risk helping here. When you spend with ikigai, it helps you to pause in your purchasing and reflect on what opportunities are there for your money — whether that’s spending, saving or investing.”

Staying conscious of how we manage our in-person and digital lives is a fine balance. But it is possible. Sometimes that might mean taking a break from things online, turning off our mobile wallet or hitting pause on social media. Sometimes it might mean taking our budgets and goals offline, using journals and lists to reflect on what we want to do next.

Technology can absolutely help us manage our emotional spending. Our apps are an extended part of our lives.

But we have to manage the technology too and be conscious of how this also affects our wellbeing.

Having the tools doesn’t change our habits and behaviours overnight. They won’t change our relationship with money unless we use them, proactively and consciously.

Authors: Harriet Allner and ikigai

Harriet Allner is a writer, blogger and fintech specialist. She cares about stories that matter and is passionate about promoting conversation around money positivity and financial feminism.

We built ikigai specifically for those who want to bring their lifestyle to the next level, by taking better care of their finances.

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This article is not advice. ikigai is a trading name of Ikigai Invest Services Limited, a company registered in England and Wales (Company number: 12011662). Ikigai Invest Services Limited is registered with the Financial Conduct Authority (FCA) as an EMD Agent (reference number: 902740) of PayrNet Limited, an Electronic Money Institution authorised by the FCA (reference number: 900594) and is an appointed representative of WealthKernel (reference number: 723719) which is authorised and regulated by the FCA. ikigai is not a bank. Registered address: 16 Great Chapel Street, London, England, W1F 8FL.

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