24. The Psychology of Money: Why We Overspend
Most spending decisions are shaped long before numbers enter the picture.
They are influenced by how tired you feel at the end of the day, how stressful the week has been, or how much mental space you have available when a decision shows up.
When people look back at their spending with frustration, they often assume the issue was a lack of discipline. In reality, spending behavior is usually a response to emotional and cognitive pressure rather than a failure to understand money.
Recognising that distinction changes how improvement begins.
How Emotions Shape Financial Decisions
Money is tied to safety, freedom, and self-worth in ways most people never consciously examine. Over time, those associations influence behavior.
Stress tends to increase convenience spending. Fatigue lowers patience for comparison and planning. Celebration often encourages excess as a form of reward.
These patterns develop quietly and repeat consistently. They are reinforced by busy schedules, constant stimulation, and easy access to spending options. None of this happens because someone lacks intelligence or care. It happens because emotional responses are faster than rational ones.
Understanding this helps remove unnecessary self-judgment and makes space for change.
Common Situations That Lead to Overspending
Overspending often appears in predictable moments rather than random ones. Some of the most common situations include:
-
Mental overload. Decision fatigue pushes people toward quick and familiar choices.
-
Social comparison. Subtle exposure to other lifestyles can quietly raise spending expectations.
-
Comfort seeking. Spending becomes a way to manage stress or boredom.
-
Reward cycles. Purchases are used to compensate for effort or emotional strain.
Once these situations are identified, spending becomes easier to anticipate and manage. Patterns replace confusion, and awareness replaces frustration.
Why Awareness Changes Spending Over Time
When people begin noticing how they feel before spending, they naturally slow down. That pause allows space for reflection, even if the purchase still happens.
Over time, that awareness reduces impulsive decisions without requiring strict rules. Many people find that spending becomes more intentional simply because they recognize what they are responding to in the moment.
This process works gradually. It does not rely on constant monitoring or self-control. It relies on understanding how behavior forms and responding with patience.
Action Plan
-
Pay attention to emotional context.
Notice your mood, energy level, or stress before unplanned purchases. -
Identify repeating situations.
Look for patterns rather than isolated events. -
Introduce a brief pause.
Even a short delay can change how a decision feels. -
Choose a supportive alternative.
Rest, conversation, or stepping away often meets the same need. -
Reflect once a week.
Review patterns calmly and without criticism.
Self-Understanding Is a Financial Skill
Managing money involves more than systems and strategies. It also involves understanding how you respond to pressure, reward, and fatigue.
When those responses become familiar, spending decisions feel steadier and more deliberate. Over time, that steadiness builds confidence and progress without unnecessary tension.
This is how sustainable change develops. It grows from awareness, patience, and thoughtful adjustment.
That's all for this week.
See you on Friday!
– Jonathan
P.S. Want help understanding the spending patterns that show up in your life? Reach out to me - I’ll guide you.
Disclaimer: This newsletter is general information only and is not financial advice. Always do your own research and consult a professional about your circumstances.
