Skip to main content

Financial Wellness

The Psychology of Spending and How to Manage It


Have you ever wondered why buying something new feels so good? Or why it's hard to stop shopping once you start? It turns out there's a whole science behind why we spend money the way we do. Understanding this can help us make smarter choices with our cash. Let's dive into the psychology of spending and discover ways to manage it better.

Why We Love to Spend

Spending money can feel like a thrill. When we buy something, our brains release a chemical called dopamine. This "feel-good" chemical makes shopping a joyous experience. A study by Kuhnen and Knutson1 found that just thinking about making a purchase can activate parts of our brain associated with pleasure and reward.

But there's more to it. Our spending habits can also be influenced by how we're feeling. When we're sad or stressed, we're more likely to spend money on things we don't need. It's as if we're trying to buy happiness, according to research published in the Journal of Psychological Science.2

The Impact of Social Media

Social media and peer pressure can really make us want to spend more. When we see friends and influencers showing the latest games, gadgets, or fashion, we often want to buy the same things. A 2019 survey by Charles Schwab found that about 35% of Americans spend more than they can afford to impress their friends.3

Terri Kallsen of Schwab notes that while trying to "keep up with the Joneses" is not new. Yet, social media and FOMO, or the fear of missing out, have intensified the urge to spend. She points out that spending isn't bad, but spending more than we have can hurt our financial future. These outside pressures should be noted so they don't affect your money in the long run.3

How to Manage Your Spending

So, how can we keep our spending in check? Here are a few strategies for you:

1. Understand Your Triggers

Sometimes, we shop not because we need something, but because we’re feeling bored or sad or because of social media pressure. Knowing what makes you want to spend is the first step to managing it.

Once you know what tempts you to spend, you can start to make changes. For example, if boredom makes you shop, try picking up a hobby or hanging out with friends instead. Feeling sad? Music, talking to someone, or going for a walk might help more than buying things. And if seeing all the cool stuff on social media makes you want to buy, try limiting your screen time or following accounts that focus on saving money.

Remember, it's all about noticing why you want to spend and the many factors that can impact you, personally. This way, you can find better, healthier ways to deal with those feelings or pressures and take charge of your money, instead of letting it control you.

2. Activate Some Financial Strategies

Creating your own money-saving strategies means better self-control, according to Peetz and Davydenko's 2021 study.4 When you think up ways to manage your cash, you're more likely to pay attention and stick to your plan than just following expert advice. This is because your ideas fit your habits and life better, making you more mindful about how you spend.

What does that mean, exactly? This research shows that your financial wellbeing is all about you. Now is the time to read up on different saving strategies and create a budget to see where your money is going. Then, take the time to decide which tips match how you live and the money challenges you face. There’s not a one-size-fits-all solution, so invest some time to test what works best. Your own budgeting and saving methods can help you control your spending much more effectively.

3. Wait Before You Buy

Ian Zimmerman, Ph.D., a consumer psychologist, explains in Psychology Today that impulse shopping often boosts our moods. He says impulse buyers enjoy the thrill of buying something right away, even if it's costly or unnecessary.5

If you want something, try waiting a few days before you buy it. This "cooling-off" period can help you decide if you really need the item or if the urge to buy will pass. Often, we find that the excitement of the purchase fades, saving us from buyer's remorse.

4. Use Cash Instead of Cards

The Federal Reserve Bank of Boston found an interesting difference in the amount people spent with cash versus credit cards. Their 2016 report6 indicates that when people use cash, they usually spend about $22. When they use cards or other non-cash methods, that average soared to about $112. That's almost 5 times the amount spent - a 409% increase!

Paying with cash can make you more aware of how much you're spending. It's harder to part with physical money than to swipe a card. In fact, Zimmerman also notes that using credit cards makes spending feel easier because it delays the payment, “…it’s less psychologically painful to spend your future money than your present money.”5

5. Find Joy in Free Moments

Remember that you can find happiness in the simplest things that don’t cost a dime. Spending time with loved ones, enjoying nature, or immersing yourself in a new or favorite hobby offer priceless joy. Let's explore some ways to enjoy life's pleasures without spending money:

  • Explore the Great Outdoors: Nature offers endless opportunities for exploration and relaxation. Plan a hike, visit a public beach, or have a picnic in the park to reconnect with the natural world around you.
  • Embrace DIY Projects Instead of buying new items, try creating something yourself. Whether it's home decor, gifts, or even clothes, DIY projects can not only save money but also provide a rewarding and creative outlet. Plus, they offer a fun way to spend time without spending money.
  • Plan No-Spend Days Challenge yourself with no-spend days or weekends where you don’t spend any money outside of absolute necessities. Use these days to enjoy activities that don’t cost anything. This can help break the habit of casual spending and make you more mindful of where your money goes.
  • Utilize Community Resources Many communities offer free events, workshops, and services. Check out what’s available at local libraries, community centers, and parks. These resources can provide free entertainment and educational opportunities, helping you save on costs for hobbies and outings.
  • Learn Something New Online: Take advantage of free online resources and tutorials to learn a new skill or hobby. Whether it's cooking, dancing, or learning a new language, the internet is full of free educational content.

Understanding the psychology behind our spending – like why shopping feels so good or why we want to buy what our friends have – helps us make smarter financial choices.

By acknowledging our triggers, setting budgets, pausing before purchasing, and finding happiness outside of shopping, we can manage our money more wisely. Remember, it's not about cutting out all spending but rather being more mindful about where our money goes.


  1. Kuhnen, C. M., & Knutson, B. (2005). The Neural Basis of Financial Risk Taking. Neuron, 47(5), 763-770.
  2. Cryder, C. E., Lerner, J. S., Gross, J. J., & Dahl, R. E. (2008). Misery Is Not Miserly. Psychological Science.
  3. Charles Schwab. "2019 Modern Wealth Survey."
  4. Peetz, J., & Davydenko, M. (2021). Financial self-control strategy use: Generating personal strategies reduces spending more than learning expert strategies. Journal of Experimental Social Psychology, 97, 104189.
  5. Zimmerman, I. (2012, July 8). What Motivates Impulse Buying. Psychology Today.
  6. Greene, C., & Schuh, S. (2017). The 2016 Diary of Consumer Payment Choice. Federal Reserve Bank of Boston.


St. Mary’s Bank Recognized as Top Choice by New Hampshire Union Leader Readers


What is an HSA? Understanding How Health Savings Accounts Work

St. Mary's Bank Announces 2024 Scholarship Recipients