The Psychology of Spending: Why We Buy Things We Don’t Need

Understanding your financial behavior is just as important as understanding your financial numbers. Many people create budgets, set savings goals, and commit to reducing debt, yet still find themselves spending impulsively or purchasing things they later regret. This is where the psychology of spending comes into play.

If you have ever walked into a store intending to buy one item and left with a cart full of things you did not plan on, you are not alone. These behaviors are deeply rooted in emotional and psychological patterns that influence decision-making in powerful ways.

Emotions Drive Many Financial Decisions

Spending is often tied to emotional triggers rather than rational needs. People shop to celebrate, cope with stress, alleviate boredom, or feel a sense of control. Retail therapy, while temporarily satisfying, can lead to long-term financial dissatisfaction and unnecessary clutter.

When you feel stressed or anxious, your brain may seek short-term relief. Buying something new provides a dopamine boost, a chemical associated with pleasure and reward. While the effect is short-lived, the emotional payoff can reinforce the habit of spending for comfort.

The Influence of Social Comparison

We also live in a culture where comparison is constant. Social media platforms often serve as highlight reels of other people’s lives, subtly encouraging us to keep up. Seeing friends post about new purchases, luxury vacations, or upgrades to their homes can create pressure to match that perceived lifestyle, even if it is financially unwise.

This phenomenon, often referred to as “keeping up with the Joneses,” can lead to spending driven by status rather than substance. Over time, these behaviors can erode savings and derail long-term financial goals.

The Power of Marketing and Instant Gratification

Modern marketing is highly sophisticated. Companies use behavioral science to influence consumer choices, from the colors on packaging to the layout of online checkout pages. Limited-time offers, free shipping thresholds, and loyalty programs are all designed to encourage you to buy more and buy now.

Add to this the ease of one-click shopping and mobile payments, and it is no surprise that impulsive purchases are more common than ever. The immediate reward of buying can override long-term financial planning, especially when the transaction is quick and seamless.

Strategies to Rein in Emotional Spending

The good news is that awareness is the first step toward change. The following practices can help you to become more mindful of your spending:

Pause before purchasing: Create a 24-hour rule for non-essential items. Waiting helps reduce emotional impulses.
Identify triggers: Track when and why you tend to spend unnecessarily. Is it boredom, stress, or comparison? Recognizing the pattern helps you address the root cause.
Set meaningful goals: Financial goals that reflect your values make it easier to say no to short-term wants.
Use cash for discretionary spending: This physical exchange of money can make the act of spending feel more real.
Unsubscribe from temptation: Reduce exposure to marketing by unsubscribing from promotional emails or unfollowing shopping influencers.

A Healthier Relationship With Money

Building wealth is not just about earning more or investing wisely. It is also about developing a healthy, intentional relationship with money. By recognizing the emotional and social factors influencing your decisions, you empower yourself to take control of your budget as well as your mindset around money.

If you’d like additional insight into your spending, budgeting, and saving strategies, call our office to schedule an appointment. Together we will help you make better choices that align with your goals and values.

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

The Psychology of Spending: Why We Buy Things We Don’t Need