Retail Therapy or Overspending? The Psychology Behind Our Purchases

Have you ever walked into a DMart store to buy one item and left with a bag full of things you never planned to purchase? Or perhaps, you went to Zepto to buy milk but bought snacks, chocolates, and a few extra items you didn’t even think of adding to your cart. Well, this behavior is deeply connected to the psychology of spending.

Certain factors influence our purchasing decisions. Let’s explore them.

Why Do We Overspend?

The psychology of spending explains that purchases are usually linked to feelings rather than needs.

1.     Emotional spending

Humans often use purchases to regulate emotions. Stress after a long day at work might lead you to browse Amazon or Nykaa for ‘retail therapy’. A weekend scroll through Instagram can quickly turn into a checkout spree, with impulsive shopping feeling like instant therapy. Even moments of celebration, like the receipt of a bonus or salary, can trigger shopping sprees.

Buying something new releases dopamine, a ‘feel-good’ brain chemical, which creates temporary happiness. This is why people feel drawn to retail therapy even if they don’t need the item.

2.     Social influence

Humans are social creatures. The psychology of spending reveals that family, friends, and society at large influence our purchases. In India, social norms and comparisons are strong - owning a new smartphone, a branded outfit, or spending lavishly on festivals or weddings is considered a marker of success. This pressure nudges us to spend, even when our budget says otherwise.

3.     Rise of digital payments

Unified Payments Interface (UPI), Buy Now, Pay Later (BNPL), no-cost EMIs, and credit cards make spending effortless. Making online payments feels easier than handing over cash, disconnecting us from the value of money. This frictionless experience often leads to impulsive purchases because the act of paying doesn’t register as much psychologically.

4.     Marketing tactics

Retailers and brands exploit cognitive biases to drive spending. Scarcity tactics like “only one left in stock” or “deal ends in 1 hour”, and festive discounts, create urgency and Fear Of Missing Out (FOMO), ultimately pushing customers into impulse buying.

How to Control Impulse Spending

Knowing the psychology of spending helps us act more mindfully. Some practical steps to keep spending in control include:

• Setting a clear monthly budget and following it strictly.
• Tracking expenses daily, even the small Rs. 30–50 spends, as they add up quickly.
• Consider delaying non-essential purchases for at least 24 hours before making a decision.
• Preferring cash for discretionary expenses - it makes you more aware of how much you are spending.
• Ask yourself if an item is truly a “need” or just a “want”.
• Limit browsing shopping apps and avoid unnecessary exposure to sales.

Conclusion

The psychology of spending explains why purchases go beyond what is necessary. But by creating awareness, pausing before purchases, and channeling extra money into investments, financial security can take priority over impulse.

Before giving in to the next “deal” or impulse buy, think about how that same Rs. 1,000 could grow if invested. You can invest the same amount with Tata Moneyfy, which makes investments in mutual funds easy, transparent, and accessible.

Instead of letting the psychology of spending decide your future, let smart investments shape it.