July 31, 2023 | Allison Robertson

Decoding Your Money Habits

Today, we're talking about the psychology of spending—what's going on in our minds when we decide to part with our hard-earned cash.

Let's understand our individual spending habits and uncover when shopping turns into a coping mechanism.

Spending Behavior

Spending moneyAdobe

First, let's get our definitions straight. 

"Spending behavior" is a term that refers to how we, as individuals, make decisions about our purchases. 

It's not just what we buy, but also when, how much, and under which circumstances we choose to spend our money. 

Numerous factors shape our spending behavior, including personal beliefs, societal pressures, our current mood, and of course, our financial standing.

Shopping As A Coping Mechanism


Ever heard of "retail therapy"? 

It's a lighthearted term for using shopping as a way to combat stress or other negative emotions. 

As such, yes, spending can indeed serve as a coping mechanism. But it's essential to strike a balance. 

Occasional splurges are normal, but consistently relying on shopping to handle emotions can lead to financial concerns and increased stress.

Triggers For Spending


Several triggers can prompt us to spend money. 

Some of these are influenced by external factors, such as advertising, which uses psychological tactics to drive purchasing decisions. 

The fear of missing out (FOMO) or urgency can often lead us to buy things we don't necessarily need.

Personal triggers can also play a part. These could range from fluctuations in our mood to societal pressures, and even the ways we were brought up thinking about money.

Loss Aversion


Money isn't just an economic tool—it holds emotional and symbolic value as well. 

For some, it represents security, while others see it as a measure of success or self-esteem.

Behavioral economics introduces the concept of "loss aversion"—a psychological phenomenon where we prefer avoiding losses more than securing equivalent gains. 

This principle explains why sales or discounts are so appealing—we feel we're preventing a loss by saving money.

The Denomination Effect

Spending MoneyAdobe

One more intriguing aspect is the "denomination effect". 

This theory suggests we're less likely to spend money if it's in larger denominations. 

Ever found it hard to break a $50 bill for a small purchase? That's the denomination effect at work!

Harnessing The Power Of Understanding


Recognizing the psychology of spending can be a game-changer for our financial management. 

Being aware of our spending triggers and behaviors helps us make more conscious decisions about our money. 

Remember, it's not just about saving— it's also about cultivating a healthier relationship with our finances. 

Next time you're about to make a purchase, take a moment to understand the driving factors. It might be a psychological pattern waiting to be uncovered.


Industries That Millennials Are Killing

20 Industries That Millennials Are Killing

Discover the industries that millennials are impacting and why traditional businesses are struggling to adapt. Our in-depth analysis explores the changing consumer habits and values driving these shifts. From casual dining to traditional retail, see how the millennial mindset is reshaping the economy.
May 29, 2024 Peter Kinney

Things Only Wealthy People Know Exist

There are a million things that money can buy—and a lot of them are things that most people don't even realize are an option. Here's a glimpse into the secret world that only the richest of the rich have access to.
May 21, 2024 Jamie Hayes
Homestead Budget Internal

How to Start a Homestead On A Budget

Uncover 10 steps to starting your homestead on a budget. Find out how you can get supplies, plants, and even animals basically for free, and how to maintain it all for next to nothing.
May 17, 2024 Allison Robertson
Alex Tew and a Koosh Ball

17 Dumb Inventions That Made Millions

These simple inventions will make you scratch your head and think, "Well, I could have thought of that"...Only, you didn't.
May 17, 2024 Sarah Ng

The Top Financial Scams of 2023

Uncover the top financial scams of 2023. From fake checks and fake jobs, to government imposters and fake loan forgiveness, find out how much consumers lost in financial scams in 2023, and the most common methods the fraudsters preferred.
May 16, 2024 Allison Robertson
Jobs2024 Internal

The Highest Paying Jobs You Can Get Without A Degree

Having higher education is often associated with higher-paying job prospects, but that isn't always the case. Some jobs don't need you to have a degree to make a decent living—all you need is a high school diploma or equivalent.
May 14, 2024 Eul Basa

Dear reader,

It’s true what they say: money makes the world go round. In order to succeed in this life, you need to have a good grasp of key financial concepts. That’s where Moneymade comes in. Our mission is to provide you with the best financial advice and information to help you navigate this ever-changing world. Sometimes, generating wealth just requires common sense. Don’t max out your credit card if you can’t afford the interest payments. Don’t overspend on Christmas shopping. When ordering gifts on Amazon, make sure you factor in taxes and shipping costs. If you need a new car, consider a model that’s easy to repair instead of an expensive BMW or Mercedes. Sometimes you dream vacation to Hawaii or the Bahamas just isn’t in the budget, but there may be more affordable all-inclusive hotels if you know where to look.

Looking for a new home? Make sure you get a mortgage rate that works for you. That means understanding the difference between fixed and variable interest rates. Whether you’re looking to learn how to make money, save money, or invest your money, our well-researched and insightful content will set you on the path to financial success. Passionate about mortgage rates, real estate, investing, saving, or anything money-related? Looking to learn how to generate wealth? Improve your life today with Moneymade. If you have any feedback for the MoneyMade team, please reach out to [email protected]. Thanks for your help!

Warmest regards,

The Moneymade team