Do you find yourself getting to the end of each month and wondering where on earth all your money went? You might start with good intentions, but somewhere along the way, perhaps due to an extra coffee and cake here or a spontaneous online order there, you’re spending more than you meant to. By the time payday or invoicing comes around again you’ve run out of money or you’re dipping into your overdraft to cope.
If that sounds familiar, you’re not alone. Spending money is just as much about the psychology of overspending as it is about figures and spreadsheets. I’ve chatted to so many people who felt stuck in a cycle of overspending, frustration and shame. That frustration often gets worse over time because they blame themselves. They feel like they lack willpower, but in reality, they simply hadn’t recognised the emotional and behavioural patterns behind their financial decisions. So, in this blog I’m going to explore what’s really going on when we spend money, why it matters and how you can take steps to manage your spending once and for all.
What is the psychology of spending?
The psychology of spending is all about how your emotions, thoughts and habits influence the way you spend or save money. Whether you realise it or not, your relationship with spending is shaped by your past experiences, individual emotional triggers and sometimes even societal pressures.
Understanding your relationship with money can be a game-changer. That’s because once you know why you spend the way you do, you can start to make intentional, confident choices about how you use your money. This shift isn’t about battening down the hatches and never spending a penny; it’s about control and making sure your relationship with money is in alignment with what truly matters to you.
Why does overspending happen?
Overspending often isn’t as simple as liking nice things (although who doesn’t?), instead it’s often tied to deeper factors. Here are a few common triggers for overspending that I see time and time again:
- Emotional spending: Feeling stressed, bored or even celebrating a win in life or business? Spending can feel like a quick fix. A new top or a fancy dinner out might seem like a way to lift your mood, but it rarely lasts.
- Keeping up appearances: The pressure to keep up with friends, colleagues or even influencers on Instagram can feel overwhelming. Whether it’s a new riding coat or joining in a group holiday to Cornwall, the fear of missing out or falling behind can persuade us to overspend.
- Impulse buying: Marketing is designed to tempt us, and it’s in our faces all the time now that most of us carry a smartphone. From emails about “once-in-a-lifetime” sales to “free delivery if you buy now” offers on Instagram, it’s all geared towards making you act in the moment rather than consider if you really need the item.
- Lack of awareness: Lots of people don’t track their spending closely which can land them in a pickle. Small purchases like a takeaway once a fortnight or adding a new streaming subscription can add up to a big hole in your budget before you even realise it.
- The feel-good factor: Making a purchase can trigger the release of dopamine, a feel-good chemical. That’s why buying something new can give you a temporary high and make you happy. Sadly, it’s often followed by guilt or regret if you’re spending money that you need for bills or rent.
How to stop overspending
The good news is that you can take back control of your spending. Here are some of my top tips to help you break the cycle of overspending and build healthier financial habits:
- Get clear on your goals: Remember what you are working towards. Maybe it’s saving for a dream holiday, paying off debt or simply feeling more secure on a monthly basis. Having clear goals makes it easier to say “no” to purchases that just don’t align with your bigger picture.
- Track your spending: Keep a spending diary or use an app to see where your money is going. It can be eye-opening – and maybe a bit sobering – to realise how much those little extras add up.
- Pause before you buy: If you think emotional triggers are causing you to overspend, introduce a cooling-off period for all non-essential purchases. That jumper you spotted online? Leave it in your basket for 24 hours and see if you still feel the same urge to buy it. Maybe check in with your long-term money goals in the meantime…
- Switch to cash: It can be harder to part with physical cash than to quickly tap a card. Withdraw a set amount for coffee, lunches and treats each week, and stick to it.
- Identify your triggers: Notice when you’re most likely to overspend. Is it after a stressful day at work? When you’re scrolling through social media? Recognising your triggers allows you to replace spending with a healthier way to cope, like going for a walk or calling a friend for a natter.
- Celebrate your progress: It’s important to acknowledge your wins. If you manage to save £50 this month by cutting out unnecessary purchases, give yourself a huge pat on the back.
Why your money mindset matters in the psychology of overspending
The way you think about money influences everything – from how you spend and save to how you feel about your financial future. By understanding the psychology of spending, you can begin to reframe your relationship with money. Instead of feeling out of control or guilty, you’ll start to feel empowered, intentional and proud of the choices you make.
Remember, this isn’t about striving for perfection. Life happens, and some months will be trickier than others. But with a little self-awareness and a few practical tools, you’ll be well on your way to a healthier and happier relationship with money. Remember, you can always drop me a line to see how I can help you on your journey to a better money mindset and financial freedom.