STRESS & SPENDING

Take control of stressful situations to curb overspending

At school, work or home, stress is inevitable. While a little bit of stress can be good, chronic stress can lead to health problems and loss of productivity.

It also affects the way a person spends money and specifically what money is spent on, a recent study finds.

Stress and saving

Worry and anxiety can have an impact on your wallet, said Kristina Durante, an associate professor of marketing at Rutgers Business School who researches the effect of hormones on consumer behavior.

“Stress leads consumers to favor saving money,” Durante said.

But, although stressed consumers want to save, when faced with a spending decision, they will pay for necessities they think will help restore control rather than splurge on non-necessities.

“What we found was for those with momentary levels of acute stress who then go and make a decision about how to spend their money, they want to save their money.

But for those who were stressed out and then had their sense of control restored, we found they were more willing to spend their money,” Durante said.

Stressed people may overspend on — even hoard — things like paper towels or household goods because they consider them essential, Durante said, and what people deem a necessity changes depending on what kind of stress they’re feeling. If you’re stressed, it may lead you to believe you really do need a Costco-sized supply of cleaning products.

Regaining control

It all comes down to control. In stressful situations, your body reacts with an increase in production of the stress hormone cortisol, which helps a person focus attention on a threat.

“If you turn back the clock, it’s like when a lion jumped out at the hunter. Cortisol and adrenaline helped him focus to enter survival mode,” Durante said.

Some control is better than no control, said Durante, who compared two situations: When you’re feeling stressed about your children, you usually have some control. In other areas, for example, giving a speech in front of an audience or taking an exam, you may feel you have less control.

Taking control in a stressful situation can help you control your spending habits.

“One way to get back to a baseline is to try and think about what things you can take control of,” Durante said. “Take a moment and think of other situations where you do have control. Think about ways you can control a small part of what’s stressing you out.

“The key in whether stress leads to spending or saving hinges on your degree of control. Really take time to think about what you have control over. It can not only help you calm down, it can also help stop behaviors that can have long-term negative effects, such as overeating or overspending,” Durante said.