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Nov 13, 2019-Wednesday



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Wednesday, Nov 13, 2019

Retail therapy: A little good, lot of bad

While retail therapy does wonders to your mood, it decreases your savings and hence has a negative impact on your finances.

business Updated: Sep 02, 2019 15:10 IST
Mrin Agarwal
Mrin Agarwal
The drawbacks of retail therapy far outweigh the benefits.
The drawbacks of retail therapy far outweigh the benefits. (Reuters Photo (representational image))

Ariana Grande’s song 7 Rings is a perfect ode to retail therapy! It goes “I see it, I like it, I want it, I got it…”.All of us love shopping. Shopping is great, as it releases dopamine and makes us feel good. It makes one feel in control, on top of things and escape from reality. We use retail therapy to forget our problems for the short term.

You don’t shop only when you are down, angry,sad or bored. Indians for long have had a tradition of buying new clothes for festivals. With super sales happening the year round and the need to be Instagram worthy or the best dressed in your clique, people are shopping the year round.

While retail therapy does wonders to your mood, it decreases your savings and hence has a negative impact on your finances. And if you have existing debts, the momentary pleasure retail therapy gives, would end up adding more stress in your life. The drawbacks of retail therapy far outweigh the benefits.

For some people, it has become a part of their routine to regularly shop, so that they appear cool. Even if you can afford it, there are better ways to spend your money rather than buying more clothes than you can wear.

While retail therapy works in the short term, it affects your financial security and long-term goals, since you may be using the funds meant for essential future needs. Overspending over a period of time leads to a feeling of guilt and not only causes financial stress but emotional anxiety, which makes you spend more on health related expenses. The easy and quick availability of credit, even for small value purchases, is getting people to spend more. Too many unsecured loans can influence your credit score negatively, thus making it difficult to access further loans, when actually required. So what can you do to stop splurging:

Budget for fun expenses

Retail therapy is fun and a great stressbuster. Who doesn’t enjoy it? As a part of your budget allocation, keep aside an amount towards fun expenses, which includes some money for splurging on non-essential items. Ensure that you limit your purchases within this budget. Also, automating your investments is a great way to ensure that you are spending only after saving.

Buy things in cash

If you are prone to overspending, then use only cash for purchases. Credit and debit cards make us spend more than what we should. In case of online shopping, keep items in the cart for 24 hours before you purchase them.

Find alternative options

Look for other options to relieve stress, sadness or boredom. Talk to a friend or a family member. It’s always nice to have a buddy, who you can vent to. If you are going to a mall for shopping, take a friend or a family member, who can give you an honest opinion about your purchases and stop you from splurging.

Question yourself

If you are a frequent shopper, ask yourself if you really need what you are buying and will you use it? We probably use only 50%-60% of the clothes which we have and don’t end up using a lot of other things that we spend for.

Maintain a diary

I have always found that maintaining a diary helps us keep track of things. Having a journal of all superfluous expenditure will serve as a good deterrent to unnecessary spending. Make excuses or make changes. The choice is yours.

Mrin Agarwal is a financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra