The Psychology of Spending: Why We Buy What We Buy
If you’ve ever found yourself wondering why you buy things you don’t need, you’re not alone. Your spending habits aren’t just about whether you have the money — they’re deeply influenced by your mood, desires and fears.
The urge to snag a sale item or the need to feel better after a rough day often overrides what you know is right, leaving your wallet lighter. Understanding the psychological triggers behind your spending can be the key to making smarter financial decisions.
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Psychological Factors That Drive Spending Behaviors
Dr. Michael Kane, board-certified psychiatrist and chief medical officer at Indiana Center for Recovery, explained the following psychological factors that drive people’s spending behaviors.
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Fear of Missing Out
Kane said that the fear of missing out — aka “FOMO” — is a big reason why many people find themselves making impulsive purchases.
“It’s that feeling you get when you see others enjoying something you don’t have, like the latest gadget or trendy shoes,” he explained. “This fear can push someone to buy something just to keep up or to fit in, even if they didn’t plan on buying it in the first place.
Kane said that marketers often play on this fear by creating a sense of urgency, like limited-time offers or exclusive deals, which can make shoppers feel like they must act quickly or risk losing out. “It’s all about that emotional tug that often leads to spending more than we actually intended,” he said.
Desire for Instant Gratification
“Instant gratification means the desire to experience pleasure or satisfaction immediately without delay,” Kane said. “Many people don’t want to save up for something or wait a long time to buy it. If they see it, they want it now.”
Kane said that wanting instant gratification can lead to impulsive and sometimes unnecessary purchases. “A lot of the time, those who fall victim to this psychological factor end up with buyer’s remorse later on,” he added.
Attempting To Cope With Unpleasant Feelings
Spending money to fill a void or make yourself feel better is a mistake.
“If you’ve ever heard of retail therapy, you know that many people tend to shop when they’re feeling stressed or upset,” Kane said. “This leads to impulsive purchases and overspending.”
How To Develop Healthier Spending Habits
Here are some mindset tips and practical strategies that Kane recommends for people who want to change their spending habits for the better.
Know the Difference Between Needs and Wants
“One mindset shift that can help develop healthier spending habits is understanding the difference between needs and wants,” Kane said.
“Needs are essential items or services that are necessary for survival, such as food, shelter and clothing,” he said. “Wants, on the other hand, are things we desire but can live without. By distinguishing between these two categories and prioritizing our needs over our wants, we can avoid impulse purchases and overspending.”
Practice Delayed Gratification
If you’re focused on instant gratification, it can lead to impulsive spending. To counteract that mindset, focus on the opposite, Kane explained.
“By practicing delayed gratification and being patient, we can avoid making unnecessary purchases,” he said. “This means waiting a certain amount of time before making a purchase, giving us time to think it over and determine if it’s something we truly need or just want in the moment.”
Avoid Being Materialistic
Kane said that being materialistic means placing a high value on material possessions and using them to define your self-worth.
“When we have a materialistic mindset, we are more likely to make impulsive purchases to keep up with others or impress them,” he explained. “By shifting our focus away from material possessions and valuing experiences and relationships instead, we can develop healthier spending habits and avoid overspending on unnecessary items.”
Create a Spreadsheet of Your Finances
“Creating a simple spreadsheet can really help you get a clear picture of your money situation,” Kane added.
He recommended listing your income first and then tracking your expenses, such as rent, groceries and any other bills.
“This way, you can see where your money is going each month and identify any areas where you might be overspending,” he said. “Plus, when you have everything laid out, it becomes easier to make smarter choices about your spending. You might even find some subscriptions or habits that you can cut out to save a few dollars.”
Find Other Ways To Cope With Stress, Anger or Sadness
Retail therapy might temporarily distract you if you’re struggling with unpleasant feelings, but it’s not the best course of action for your bank account.
“Instead of turning to shopping as a coping mechanism, try finding healthier ways to deal with these emotions — maybe try getting into a fitness hobby, picking up a creative outlet or talking to a friend,” Kane explained. “Finding healthier coping mechanisms can help break the cycle of bad spending habits.”
Set Financial Goals and Stick To Them
Kane suggested setting financial goals as a way to put a halt to mindless spending.
“Maybe it’s to save a certain amount of money each month, pay off credit card debt or save for a big purchase (like a car, a big trip or a house),” he said. “Having clear and specific goals can help focus your spending habits and avoid unnecessary purchases. And when you achieve these goals, the satisfaction will be much greater than any temporary happiness from an impulse buy.”
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