We're more likely to spend after a break-up. Should we budget for it?
Navigating the aftermath of a breakup can be emotionally challenging, but it's crucial not to overlook the potential financial impact. Financial advisers often push us to have a rainy-day or an emergency fund to cover unexpected expenses, such as medical bills or home repairs. But we are less inclined to budget for expenses associated with emotional turmoil like heartbreak, despite being likely to indulge in them whether we can afford to or not.
Scott Rick, a behavioral scientist at the University of Michigan, co-wrote a 2014 study that showed that engaging in retail therapy could reduce anxiety and sadness. As a result, it's not uncommon for people to spend impulsively as a way to cope with a breakup.
To avoid derailing your financial goals, set a strategic budget in place as you recover from your heartache.
Step 1: Assess the Emotional Damage on Finances
Breakups can cause people to spend way over their budgets, and the cost-of-living crisis only exacerbates this. Plus, it’s not just the post-break up shopping that makes break-ups expensive. New research from Experian finds that the average breakup costs a couple $1,287, which includes finding a new place to live.
On top of that breakups can lead to emotional spending, from retail therapy to impromptu getaways. Recognize the potential financial pitfalls and acknowledge the need for a thoughtful budget to avoid unnecessary debt.
Step 2: Create a Post-Breakup Budget
First things first--evaluate your finances. Take stock of your current financial situation, including income, expenses, and any shared financial responsibilities that may have changed due to the breakup. Identify essential expenses; and prioritize necessities like rent, utilities, and groceries. Ensure these are covered before allocating funds for discretionary spending.
Next, decide how you want to allocate your discretionary spending as you manage your heartache. Do you need a larger DoorDash allocation because you won't feel like cooking as much? Do you need a going-out budget to reconnect with friends and go out on first dates? Or do you to cordon off a portion of your discretionary spending to sign-up for gym classes or to pick up a new hobby?
If you can't afford to set aside much of your budget for discretionary spending, you don't need to splurge on costly retail therapy either. Consider alternative, budget-friendly methods for self-care, such as journaling, meditation, or outdoor activities.
Step 3: Resist Impulse Spending
Before making any non-essential purchases, give yourself a cooling-off period. This prevents impulsive decisions driven by emotional distress. Carl Richards, a financial planner and director of investor education at the BAM Alliance, recommends waiting 72 hours before purchasing anything outside of your budget.
You can also seek support from loved ones, to avoid impulse spending. Reach out to friends or family for emotional support rather than relying on material possessions to fill the void.
If all else fails, try filling your shopping cart, but then ultimately abandon it. According to Scott Rick's 2014 study, even found that hypothetical, simulated purchases were soothing.
Step 4: Avoid the Pitfalls of Credit Card Debt
While some light retail therapy after a breakup is nothing to worry about, understand that excessive spending won't heal emotional fissures. Instead, focus on long-term financial planning, including limiting your credit card usage. Be mindful of your credit card expenditures, and pay attention to your credit utilization ratio. High balances can negatively impact your credit score.
Conclusion
It's no wonder why heartbreak can take a toll on both your emotions and your wallet.
“There are a multitude of reasons why we might spend money more impulsively after a breakup,” explains relationship therapist, Rachelle Watson, “I often see this tendency driven by a need to exercise power or control, especially if we’re on the receiving end of the breakup.”
However, by proactively setting a "breakup" budget, you can emerge from heartbreak with both your heart and your finances intact.
In fact, Jessica Lyons, a financial advisor at Black Swan Capital advises, “No matter how the breakdown of a relationship occurs, there is a period of adjustment and change. A budget is one area where it is possible to take control. This can be an empowering experience."