Spending Choices

The Psychology of Money - change your thoughts about money

Most of us are faced with making Spending Choices each day

We all know that money matters take up a lot of thinking time. But what do you really know about the psychology of money and how it ultimately affects your relationship with money? Lets look at how you can make some mindful Spending Choices to change from your current situation. That is definitely a better use of thoughts around money.


Firstly, until we personally explore our emotions and attitudes towards money, it is very difficult to successfully move to a new way of “thinking about spending“. And in turn then create better habits that help to successfully save money.


So, let’s explore a bit more how better to understand the psychology of money and the direct impact it has on our financial health. 

How your mindset influences your Spending Habits

Your money mindset is the set of thoughts and attitudes you have about money. This includes your opinions about its value, purpose, and use.


Leading on from there, your money attitude is influenced by a range of different circumstances. These may include your childhood and upbringing, culture, social standing, and life experiences.


It’s important to also understand that your money mindset effects your financial behaviour, such as spending or saving habits, and investing decisions. For example, someone with a scarcity mindset may be more prone to hoard their money and avoid spending on anything other than day to day basics. 


Whereas someone with an abundance mindset may be more likely to spend freely and confidently without considering the long-term effects.

We explore these very different types of mindsets throughout our website. 

beliefs about money

A really important first step, is being honest with yourself.

Take a look in the mirror now, and ask yourself  –  “What do I know about my underlying behaviours and beliefs towards money? ” 


If you’re like most people, there’s a really good chance you haven’t taken the opportunity previously to even think about that question. If you answered that you aren’t really sure, that’s okay.


The good news is, at Spending Choices we have put together some advice and information to help you answer that question. 

The Money-Happiness Relationship

One of the most fundamental ways your money attitude effects your money behaviour is through its relationship with happiness. Many of us feel that having more money will instantly make us happier, but research says otherwise.


While having enough money to cover your basic needs and some discretionary spending can improve overall well-being, the relationship between money and happiness becomes more complex beyond a certain point.


Studies have found that people who prioritise experiences and relationships over material possessions tend to be happier and more fulfilled in the long run. Therefore, it’s essential to focus on spending money on things that align with your values and bring you joy rather than simply accumulating more material possessions.

There is a great book titled The Psychology of Money”  by Morgan Housel, an award winning author.

He powerfully states “Timeless lessons on wealth, greed and happiness – doing well with money isn’t necessarily about what you know. It’s about how you behave. “

He shares 19 short stories that explore the unusual manner in which many people think about money.


It also skills you in how to gain a better understanding of this influential life topic. As a personal example, until about 4 years ago, we enjoyed a very busy social life, without too much thought given to the impact on our savings balance.


That doesn’t mean we had a lot of money, more like we spent a lot of what we earned!


That included dinners at restaurants, multiple holidays each year, loans to buy nice cars.

Do we regret the fun we had – absolutely not. However, in those past 4 years, we have learned a lot about the psychology of money.

After reviewing our financial health, we ultimately had to make some positive changes to our money management.


 After introducing conscious or mindful spending into our life, we now ensure there is a “value” for the money we spend. 

And don’t forget the point made earlier, being mindful with your money is a form of conscious spending or intentional spending.


(You can read more here about What is Mindful Spending?)

People are happier spending money when it aligns with their personal values

money and personal values

It’s about having a clear awareness of how you want to spend your hard earned dollars.


It doesn’t mean you can’t spend money, it just means it’s better to attach a value to that purchase.


Mindful spending not only has the potential to improve your savings – it can also help you declutter. How? By stopping impulse buying on unwanted items.

Tips for Prioritising Experiences Over Possessions

To shift your mindset toward prioritising experiences over possessions, consider the following tips:


  • Take time to identify your values: Decide what is most important to you in life? What experiences would bring you the most joy and fulfillment?
  • Set goals: Set specific goals for the experiences you want to have, such as traveling to a new place or taking a class in something you’re passionate about.
  • Create a budget: Allocate your money toward the experiences that align with your values and goals. Cut back on spending in other areas to make room for the experiences that matter most to you.
  • Be entirely present: When you’re experiencing an experience, be fully present and savour the moment. Take time to savour the experience and memories you’re making.
"When you master mindful spending, you learn to buy according to your lifestyle goals, leaving you feeling more abundant and never deprived or restricted"

The Influence of Behavioral Economics

Behavioral economics is the study of how psychological elements such as emotions, biases, and speculation influence your behaviour. Understanding the concepts of behavioural economics can help you make better financial decisions by recognising the cognitive biases that frequently lead to poor decisions.


According to the concept of loss aversion, people are more likely to take risks to avoid losing money than to acquire it, even if the potential profits outweigh the potential losses. By recognising this bias, you can make more reasonable decisions about investing and risk-taking.

Unsurprising fact!

In the majority of cases, YOU get to make the final decision on how you CHOOSE to spend your hard earned money.


So, it makes sense to approach spending in a more mindful or conscious manner. 


Remember, taking a mindful approach is about creating an important value to the money you spend.


positive money mindset

How do I practice mindful spending? 

Put simply, mindfulness is the ability to be totally present. That means you’re not thinking about what happened last week  or what could happen tomorrow. You focus on now and today. 


Achieving mindful spending is about practicing a similar approach with your spending habits.


Rather than making that online purchase without much thought, you can build a mindset that allows you to pause, before spending. Take a moment to think about what you’re about to do. And ask yourself does this align with your goals and values? 

By taking this considered approach, you can now make a more conscious decision. You can choose to spend your hard earned money on something that may or may not support your goals and overall wellbeing.


By building up your mindfulness muscle, for example by engaging in a regular mindfulness practice (check out Positive Psychology, or 5 Steps to Mindfulness) you can bring a much greater level of attention to your spending habits, learn to really enjoy and value the purchases you do make. Then benefit from the positive rewards of increased mindfulness.

Recognising your spending traits is a good step – committing to changing these traits for improved behaviours is better!


3 Traits to help you identify your spending behaviours

Impulse buying

  • This is a “knee jerk” approach to spending – seeing it and buying it without any thought 
  • Ask yourself – does it align with your goals? Maybe give it a day or so to think about it. 
  • If you still consider this will add value or be a meaningful purchase, then at least you have exercised a mindful spending approach.

Emotional shopping

  • Marketers love putting sales items and signs in front of you to capture your attention and your money.
  • Unless you’re a very emotionally strong person, these are the retail situations to remove yourself from
  • Not all the time, because sometimes there is a need to consciously save some dollars on an item you need – but don’t get caught up in the “every weekend” SALE pitch.

          NEEDS versus WANTS

  • An important difference here, and key to your mindful spending strategy. 
  • Being mindful is not going without, stopping spending totally, and becoming a person with a scarcity mindset .
  • Its knowing we all have purchases that are NEEDS and WANTS. 
  • You NEED to pay your phone and energy bills, you NEED to put fuel in your car, but you WANT to have that takeaway pizza or you WANT to spend that $250 on a music concert.

Did you recognise your spending behaviour?

It’s really important to understand this pattern of behaviour. Why? Because it means you are taking action that stops you wasting money. You then get to decide whether you should be buying the item or not – now you are being mindful.

Its knowing we all have purchases that are NEEDS and WANTS. 

Needs versus Wants

IMPORTANT to remember.  With anything that is new, results don’t happen overnight.

When you consider your beliefs have most likely been formed over many years, there is consistent effort and focus required to initiate a change. 


And isn’t that a positive mind challenge to face ? We say YES definitely. Embrace these challenges and celebrate the changes!  


Once again it comes back to having that future goal and ensuring you “begin with the end in mind” (Stephen Covey – The 7 Habits of Highly Effective People).


This will drive you towards achieving your ideal outcomes in life or with money.

money decisions

We recognise that everyone’s circumstances can be different, so there is no one shoe fits all approach here. 


 BUT there are some basic steps that can be taken to initiate some progress in the right direction. 


So try these, and don’t forget it’s about YOUR consistent effort and focus to make any change a success. Making changes can be hard at first, because it’s something new and challenging.

However, changes mean something fresh and exciting too! So have some fun along the way. 

5 steps towards making better money decisions


 about how you can embrace mindful spending and the conscious choices you can control. Here’s a good article discussing how mindful spending can transform the way you manage your money

Take time...

to set some realistic and useful financial goals ( spending AND saving)


that having completed the first 2 steps above, you must review your progress on a regular basis (monthly as a minimum) and set achievable timeframes


to enjoying these changes. Don’t deny yourself pleasures, just attach a real value to any major purchase decision.

Save more spend less...

congratulations! It’s now time to decide where you will save or invest your hard won dollars.

The above steps are a small start on your journey.

See our articles on tips for spending less, to create further opportunities to create better money decisions.

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