The Psychology of Money: What makes you spend and save?

Whether you spend impulsively, hesitate to save, or enjoy watching your bills grow, your financial choices go beyond logic. Emotions, childhood experiences, beliefs and the environment in which you live all have an influence on them.

The psychology of money helps us understand why people with similar incomes can have such different attitudes towards saving and spending. Or why we sometimes buy things on impulse to relieve stress or compensate for something.

In this article, we will explore the most common financial profiles and the main emotional triggers that cause you to spend. We will also suggest some simple ways to gain more clarity and control over your financial behaviour.

What is the psychology of money?

The psychology of money involves studying how we think, feel and act in relation to it. It encompasses not only the mathematics of finance, but also the emotions, beliefs and behaviours that influence our financial decisions.

It involves the habits we develop in relation to saving or spending, as well as the ideas we have inherited from our family about what it means to "have money” or "be responsible”. Understanding your money psychology can help you to become more aware of the patterns that influence your behaviour, even when you are not aware of them. This can help you to make choices that are more in line with your goals and values.

Financial profiles: what’s yours?

Not everyone handles money in the same way. Some people save every cent, some people live without looking at their bank statements, and some people alternate between phases of great control and phases of greater impulsiveness. Understanding your profile helps you recognise your strengths and challenges, and identify areas for improvement.

1. Saver profile

A "born saver” avoids unnecessary spending, enjoys seeing their balance grow, and feels secure when they have a well-stocked emergency fund. Yes, they have control, but sometimes they avoid taking excessive risks, even when there are opportunities to increase their wealth.

2. Balanced profile

These people are aware of their spending and prioritise accordingly, but they also allow themselves to enjoy life. They keep track of their budget without becoming obsessed with numbers. However, even those with a balanced approach today may benefit from reviewing their protection and investment strategies in the future, because life changes.

3. Anxious profile

Do you feel uncomfortable when the subject of money comes up? Even if you earn a good salary, are you always worried that you're not doing "enough”? If so, this profile may be for you. Gaining clarity and becoming more organised financially can help reduce anxiety, especially with the necessary support.

4. "Disconnected” profile

You’re not sure how much money you have, how much you're spending, or where your money is going. You avoid looking at your accounts, balances or statements. You would rather "not think about it”. This is a typical example of a "disconnected” money profile. However, ignoring the subject won’t make it go away. Starting with small routines, such as recording weekly expenses, can make a big difference.

5. Impulsive profile

People with this profile like to seize every opportunity. Impulse purchases, lavish gifts and meals out take precedence over planning, as immediate pleasure is prioritised. However, the cumulative effect of repeated small decisions can be significant by the end of the month. Creating healthy boundaries can provide more peace of mind than you might think.

What drives you to spend (or avoid spending)?

Our relationship with money isn’t purely rational. Many financial decisions are influenced by emotions, past experiences, or deeply held beliefs. The following are some of the most common triggers:

1. Emotional reward

After a hard day, you might feel the urge to "make up for it” by making a purchase. It could be anything from a special dinner to a piece of clothing or something symbolic. The brain associates immediate consumption with instant relief or pleasure. This can become an unconscious habit.

2. Fear of missing out (FOMO)

Promotions with countdowns: "Today Only”, "Last Offers”. It all gets to us, doesn’t it? We all have a natural tendency not to want to "miss out”, which can lead us to buy things we don’t really need.

3. Emotional memory

Were you raised in an environment of scarcity? Or where spending was a sign of freedom? These experiences shaped your beliefs, which still influence your decisions today.

4. Anxiety and uncertainty

In times of instability, some people spend money to relieve tension, while others freeze decisions for fear of making mistakes. Excessive control and total disconnection are both ways of dealing with anxiety.

5. Comparing yourself to others

Watching the lifestyles of your friends, family members or influencers can lead you to spend money in order to "keep up” or to feel as though you are doing what you are supposed to be doing.

Six money psychology strategies for dealing with financial triggers

While you may not be able to avoid the impulse itself, you can learn to recognise it and respond more consciously.

1. Recognise the pattern (without judging it)

Before trying to change any habit, take the time to think. When do you usually make impulse purchases? At what times do you feel most inclined to buy things or avoid looking at your bank account? If you realise that you tend to shop online whenever you’re feeling bored or anxious, that’s a valuable clue in itself.

2. Talk about money, even if it makes you feel uncomfortable

Talking to someone you trust, such as a partner, friend or financial advisor, can help you realise that your doubts and beliefs are not unique to you. Expressing your feelings can help you to gain clarity and realise that you are not alone.

3. Create barriers to impulsivity

If you know that you tend to spend money impulsively, create some small obstacles to help you avoid doing so:

  •  Remove any card data that has been stored on websites and apps;

  •  Create a 48-hour waiting list before making any non-essential purchases;

  •  Use an app that alerts you when you're approaching the limit you’ve set.

4. Redirect your emotions into something constructive

If spending is your way of dealing with emotions, try replacing the behaviour with one that also gives you pleasure or relief. It could be going for a walk, writing, listening to music or cooking – anything that distracts you from the "urge to buy”.

5. Set yourself meaningful financial goals

Saving just for the sake of it can seem like a boring obligation. However, when you have concrete goals, such as travelling, buying a house or having the flexibility to change your life, your brain begins to prioritise saving over spending. Visualise your goals. Keep a photo in your wallet or a Post-it note on your computer, and review your plans from time to time.

How to invest according to your profile

Understanding your financial profile involves more than simply categorising yourself as "conservative” or "bold”. The key is to understand what money means to you – whether it's security, freedom, control or status – and how these factors influence your decisions.

If you’re cautious and prioritise security

Just hearing the word "volatility” may make you feel anxious. If that applies to you, it’s best to start with low-risk or guaranteed capital instruments:

  •  Term deposits to develop a savings habit and offer a guaranteed minimum return, also known as yield;

  •  Bond funds or more conservative funds with less exposure to shares.

If you tend to be impulsive

Hasty decisions and impulse purchases can also arise in the world of investment. For example, investing all your money in cryptocurrency just because "everyone says they're making money from it”. The solution lies in creating simple rules to help you maintain discipline:

  •  Automate your monthly investments, for example by investing €100 in an ETF each month;

  •  Set up a "24-hour rule” for any new investment decision;

  •  Monitor performance regularly, but not obsessively. For example, review it once a quarter.

If you’re very goal-oriented

You love planning: retiring at 55, buying a holiday home in ten years’ time and setting up a fund for your children. This clarity can be a huge advantage, provided you select products that align with each deadline:

  •  For 3 year goals: savings certificates or short-term bonds;

  •  For 10 or 10 plus goals: equity funds, thematic ETFs, or capitalisation insurance;

  •  For children: children's savings account or a planned investment in global ETFs. PPR (Retirement Savings Plan) as a long-term alternative offering tax benefits.

If you're unsure about investing or feel that "it’s not for you”

You may have grown up with the idea that keeping your money "under the mattress” is the best thing to do. Or that investing is only for those with a lot of capital or technical expertise. However, it doesn’t have to be that way:

  •  Start with a simple and transparent product such as an ETF that tracks the S&P 500;

  •  Either consult an account manager or use an online simulator to understand the impact of compound interest;

  •  Invest €X per month for a year to see how you feel about this routine.

The psychology of money: the best investments start with a better understanding of yourself