Reactive Spending and How To Fight It

Reactive spending is buying things in response to either feelings or your current situation.

Sometimes we can't avoid reactive spending. Something terrible happens, like with our car, and we need to get it replaced.

Reactive spending becomes a problem when we 100% spend money based on emotion without thinking about what we are doing. I've done a ton of reactive spending in the past, and it took years for us to pay off our credit card debt.

What Is Reactive Spending?

The concept of reactive spending is separating your spending from your financial goals.

It becomes about filling a perceived “need” at the time, which is usually led by emotions. We tend not to think about the actual cost of the amount of money being spent.

An example of deadly reactive spending is having a tough week at work. That weekend, I decided that I deserve a beautiful sports car. I know I can afford the payment, and so I go to the car dealership and buy an expensive car.

At first, this might not seem like a big deal. But I've increased my monthly expenses, and I'm most likely going to pay more for the car because of interest. I might have done some quick math to confirm I can afford the monthly payment, but I'm ignoring the full cost of this purchase, and whether or not it aligns with my financial goals.

The error is not in buying a sports car. If you can afford one, and it doesn't negatively impact your financial future, I'm not going to try to convince you not to get that car. The goal is being actively participating in understanding what is going on with your money. It should align with what you want.

Reactive Spending Isn't Just About Negative Situations

Reactive spending not only can come from negative situations but also positive experiences.

For example, I receive a significant promotion at work. Because I worked so hard, I decided that I “deserve” a new computer. The computer I have is not that old and works just fine, but I create this framework that justifies buying something I don't need because of my effort.

In both cases, emotions cloud our judgment.

Disconnecting Purchases From Our Financial Goals

Ten years ago, I decided that I wanted a nice TV. I worked hard and heard about the new technology that came out. I talked to Andrea and convinced her that going into debt for this TV was worth it.

My mistake was not wanting a new TV. The issue was that I didn't thoroughly think about what this purchase would do to our financial picture.

These are the questions I failed to ask myself before this purchase:

  • How long will it take us to pay off this TV?
  • About how much interest would we end up paying over that time?
  • What are our financial goals, and does this purchase fit within those dreams?
  • Is this a purchase that will add to our lives?
  • Will I regret this purchase in a few months?

Reactive Spending Is Not Patient

One way to reduce reactive spending is to fight the urge to purchase or do this “thing” immediately. Since these types of purchases are usually emotional, we will want to have the item as soon as possible.

But if we can hold off on buying whatever it is that we want, that might be all we need to figure out if this is something that will add value to our lives.

Before we know it, we may even forget that we wanted the item in the first place.

That happens to me all the time. I see something I want, and I can already tell my mind is trying to justify why I should get that item now. By pressing pause for a moment, often the emotion subsides, and I can think clearly about whether or not this purchase is worth it.

Controlled Reactive Spending

Sometimes emotionally spending money is not bad. The main thing is making sure that it aligns with your future goals, and is something you can afford.

For example, we set aside some money this year to take several short vacations. We didn't want to have a tight budget on all of them, and so we added extra margin to these budget items. We were able to do what we wanted, when we wanted, without much thought about if we could afford to do so. Of course, we had some limits, but you could call this “controlled reactive spending.”

Sometimes emotional spending is okay when we go into it, realizing what we are doing. It becomes a problem when we blindfold ourselves in ignoring the bigger picture.

It comes back to the idea that spending money isn't bad. We earn money to spend it eventually — the question becomes, how much do we want to spend now or later. and how do we pay for it. Credit card debt should be avoided if at all possible. It's one of the most expensive kinds of debt.

The Core Issue of Reactive Spending

When we purchase things in response to emotions, we buy into the idea that what we are getting is going to solve our problems. But it rarely does.

We are responding to heightened emotions that usually fade with time.

And when we commit ourselves to spend future income, we are gambling with our future. Even if you can afford to purchase something, it still might not mean it is a smart decision (but that is something you will have to figure out).

Don't get me wrong. All of us, in a sense, need ways to cope with life. That might mean we encounter low points and need something to lift our spirits. Crap that we can buy can temporarily do that some times, but it usually is temporary and will require us to buy things to keep that high up continually.

All of us will end up having a bad day or a rough week. It becomes about figuring out how to respond to these situations in a way where we can lift our spirits and not compromise our financial future.

Finding Healthy Coping Mechanisms

For me, I've learned that taking a raging hot bath relaxes my body and provides a way for me to unwind. It does cost extra to use this water, but it is minimal.

For you, it could mean going for a walk or wrestling with your dogs. In either case, these are healthy activities that don't risk your financial future. And none of them are going to be things you regret doing.

Exercising has a way of relieving stress and making us feel good. And it increases our health.

If you are like me and are working through high stress or anxiety, having multiple healthy coping options is vital. Otherwise, I could easily fall into the trap of creating bad habits or buying things I don't need, but make me feel excited.

Create a Healthy Mindset

If we are not taking care of our bodies, by what we eat and our physical health, it is going to be harder to avoid making bad decisions.

It's sad to think that when we are unhealthy, the risk of us doing more damage increases. It's as if one lousy decision makes the next wrong decision easier to make. Not too dissimilar to how drug use works.

Chemical imbalances, lacking energy, aching muscles/joints, etc. can make us double down on things that we know are not the proper decisions, but the feeling of “needing” these things is more intense.

We are never going to be perfect. But some mistakes can have a more significant impact than others. And financial decisions are no different. The more we can set ourselves up to make smarter decisions, the more likely we will push forward towards our goals.

What is the hardest part of exercising? It's getting started. Once we get the ball rolling, it becomes easier to make it a habit.

Being Tired

This idea might seem obvious, but I've found when I'm tired, I'm usually not able to make the smartest decisions.

So if I am extra tired for whatever reason, I try to avoid making any major decisions until I get some rest.

If my sleep schedule is all over the map, this can be incredibly hard because I end up feeling tired all the time — which is a recipe for disaster!

I'm going to venture and guess that this is true for most people. We aren't able to operate at our best when we are tired and only want to take a nap.

Pit of Death

At this moment, I am sitting in my home office, in my basement, listening to grasshoppers hitting my window.

My office window sits in a window well. This year, the grasshopper population is insane over here.

What happens is the grasshoppers hop into the window well, and they can't get out. They are about ten feet below ground, and their destiny is death.

I know this illustration isn't perfect, but I couldn't help but compare their destiny to what happens with reactive spending. A few bad financial choices can leave you feeling behind and defeated. If you can never get out of the hole, why not continue digging down? And that is exactly what I did.

I was so depressed by our financial situation, that reactive spending became a way of temporarily feeling better.

It wasn't until I decided to break my debt problem that we were able to start digging ourselves out.

Your Life Is Full of Patterns

People who are caught in the cycle of reactive spending aren't usually paying very close attention to what is going on.

They live their lives, spending however they want, and only realize what is going on when things get terrible. At that point, they can't ignore the problem and have to do something about it. For some people, they will repeat the cycle their whole lives and live paycheck to paycheck.

I don't look down at people who do this, because I know that was once me.

But I can't help but think if they started to look at the habits in their lives, and precisely what they were getting out of it — if that wouldn't motivate most people to stop the death cycle.

Who wants to live their lives miserable? Does anyone have the goal of ending up financially broke?

What makes me sad is that the people I see in these cycles are in pain, and they don't know how to turn things around. What they are going to for relief is only making things worse.


Think about how you are spending money, and whether or not it aligns with your future financial goals. Things aren't going to randomly end up where you want them (in most cases), and the only way you are going to get there is by intentional action.

Bad habits can be broken, but it won't be easy. I know I have work to do in regards to implementing healthy coping mechanisms. And I hope you stop to think about what is going on in your life. 🙂