534. Money isn't just about numbers; it's deeply emotional. In this episode, Dr. Monica Johnson looks at the psychology behind your financial habits, including the money scripts you absorbed in childhood and how your brain categorizes money. She looks at why you feel a certain way about spending, saving, and debt.
534. Money isn't just about numbers; it's deeply emotional. In this episode, Dr. Monica Johnson looks at the psychology behind your financial habits, including the money scripts you absorbed in childhood and how your brain categorizes money. She looks at why you feel a certain way about spending, saving, and debt.
Find a transcript here.
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Hey, I see you! You just clicked “add to cart” after a long day, then whispered to yourself, “I deserve this.” Maybe you do, but this isn’t about if you deserve it. It’s about if you can afford it, and if you can’t…Well, we are creating more problems than we are solving. I'm here to help you unpack the why behind your money habits and offer science-backed ways to shift them. So, let's talk about how your brain, your history, and your emotions are influencing your wallet and how you can take back the wheel.
Welcome back to Savvy Psychologist, I'm your host, Dr. Monica Johnson. Every week on this show, I'll help you face life's challenges with evidence-based approaches, a sympathetic ear, and zero judgment.
We’ll start by talking about what’s really going on, what’s underneath the spending.
Money Scripts
Before you ever got a bank account, you were absorbing beliefs about money, watching your caregivers pay bills, fight over spending, stash envelopes under the mattress, or use shopping as stress relief. These internalized beliefs are called money scripts (Klontz et al., 2011), and they shape your financial decisions today. For instance, if you grew up hearing “money is the root of all evil,” you might feel guilt around saving or earning too much. If you were told “money doesn’t grow on trees,” scarcity might drive your decisions, even when you have enough. These scripts often operate below the surface, but once we identify them, we can begin rewriting the narrative.
Mental Accounting
Let’s say you won $100 in a scratch-off. You feel free to blow it on dinner, even though you’re trying to save. Why? Because of mental accounting. It describes the way we mentally categorize money into buckets: rent money, fun money, "free" money, etc. These categories aren’t always rational, but they feel real. Research shows that we treat money differently based on where it came from, even if the value is the same (Thaler, 1999). That’s why a tax refund feels like a bonus, not just your money being returned. But this can lead to irrational decisions—especially when spending from a category labeled “extra.”
The Denomination Effect
Ever feel stingy with a crisp $50 bill but loose with five $10s? That’s the denomination effect (Raghubir & Srivastava, 2009). We’re more reluctant to part with larger denominations, even when the total value is equal. That’s because larger bills feel more psychologically valuable and more “real.” This trick of the brain can be used to your advantage withdraw larger bills if you’re trying to curb spending. The physicality and perceived weight can make you pause before splurging.
Doom Spending
You’ve heard of doomscrolling, now meet its cousin, doom spending. That late-night “I deserve this” spree after a rough week is more than impulse—it’s often emotional regulation. When we’re stressed, sad, or overwhelmed, shopping can serve as a temporary mood boost. The problem? That dopamine spike is short-lived, and the aftermath often brings guilt or financial strain. The APA refers to this as Spending as Social and Affective Coping (SSAC)—a fancy way of saying we sometimes shop to soothe our emotions or maintain a sense of belonging. Recognizing your emotional triggers is the first step toward reclaiming control.
Buying Happiness: Stuff vs. Experiences
We often think buying more stuff will make us happier, but research consistently shows that experiences—like travel, meals with friends, or concerts—bring more lasting joy than material items (Van Boven & Gilovich, 2003). Why? Experiences contribute to identity, connection, and memories, while things quickly become the background noise of our lives. Even spending on others, like treating a friend or donating to a cause, has been linked to increased well-being (Dunn et al., 2008). So the next time you’re choosing between shoes or a weekend trip, consider which one will still make you smile a year from now.
Optimism and Saving: The Power of Hope
Here’s an inspiring fact: people who are optimistic tend to save more money regardless of income. One large-scale study found that optimistic individuals saved 17% more than pessimists. Why? Hope fosters a future-oriented mindset. If you believe good things are coming, you’re more likely to plan and prepare for them—including saving money. Optimism has even been found to reduce financial anxiety and increase goal setting. The takeaway? Financial health isn’t just about math—it’s about mindset.
Now that we’ve unpacked what’s under the surface, let’s get into practical, science-backed strategies to build better habits. No shame, no “you should have known better”—just compassionate tools from me to you.
1. Identify Your Money Scripts
Start by journaling your automatic thoughts about money. When you think about saving, debt, or spending—what comes up? “I’ll never get out of this.” “I deserve to treat myself.” “I can’t trust myself with money.” These thoughts didn’t appear out of nowhere. They were shaped by your environment, family, and personal experiences. By identifying your dominant money script which relates to vigilance, status, avoidance, or worship you can begin to challenge and reframe it.
2. Practice Financial Mindfulness
Financial mindfulness involves bringing non-judgmental awareness to your money behaviors. One study found that people who engaged in mindful financial practices—like checking their balance calmly or tracking spending with curiosity—had better credit and more confidence around money. Try a weekly “money moment”: light a candle, play music, review your finances, and just observe your reactions. No shame. Just data.
3. Use the “Pause and Plan” Method
Before buying something over a certain dollar amount (say, $50), build in a 24-hour pause. This isn’t deprivation, it's giving your brain space to make a conscious choice. Research in behavioral economics shows that delayed decision-making reduces regret and impulse purchases. Ask yourself: Do I need this? Is it aligned with my goals? What emotion am I trying to soothe?
4. Make Mental Accounting Work for You
Since your brain’s doing it anyway, use mental accounting to your advantage. Create digital envelopes or labeled bank accounts: “Bills,” “Joy Fund,” “Emergency,” “Long-Term Goals.” Apps like YNAB or Goodbudget can help. Just don’t trick yourself into overspending from one bucket and ignoring the consequences. A budget isn’t a punishment, it's a reflection of your values.
5. Automate Where You Can
Willpower is a finite resource, but systems? They work 24/7. Set up automatic transfers to savings and bill payments on payday so you pay yourself first. Research found that people saved significantly more when increases were automated. This “set and forget” approach reduces decision fatigue and keeps your goals on track.
6. Replace the Emotional Shopping Loop
Emotional spending usually follows a pattern: trigger-then- impulse-then-reward-then-guilt. To disrupt this loop, insert a healthier behavior after the trigger. Instead of scrolling Amazon after a stressful meeting, try calling a friend, taking a walk, or a bath. Over time, your brain rewires to seek comfort in more sustainable ways. Behavior replacement is a core strategy in Cognitive Behavioral Therapy and yes, it works with finances too.
7. Spend Toward Your Values
When you spend on what matters it feels less like sacrifice and more like alignment. Ask yourself: Does this purchase reflect my values? Am I investing in who I want to become? One study found that values-based spending correlated with increased satisfaction and reduced buyer’s remorse. Whether it’s buying organic groceries because you value wellness or donating because you care about justice, let your dollars follow your heart.
8. Build a Gratitude Practice
Want to naturally spend less and save more? Start with gratitude. Multiple studies show that gratitude practices increase optimism, reduce materialism, and improve self-regulation. Each night, write down three things you’re grateful for big or small. Gratitude shifts your focus from what’s missing to what’s already abundant.
Money is emotional, psychological, and not simply material. It holds stories, dreams, trauma, and power. And most of us haven’t explored our relationship with money or been taught skills and habits to be financially stable. Now is the time to reset.
Start small. Get curious. Be kind to yourself. If you fall off track, that’s okay. We don’t build financial wellness through shame—we build it through compassion, strategy, and consistency.
So the next time you’re tempted to splurge after a hard day, take a breath. Ask yourself what you need emotionally. Maybe it’s comfort, connection, joy. And then intentionally decide how you want to meet that need. Your healing starts with awareness, and your future self will thank you.
What are your values around money? Let me know! You can contact me via Instagram @kindmindpsych or via my email at psychologist@quickanddirtytips.com.
The Savvy Psychologist is a Quick and Dirty Tips podcast. It's audio engineered by Steve Riekeberg. The Director of Podcasts is Holly Hutchings. Our Podcast and Advertising Operations Specialist is Morgan Christiansen, and Nathaniel Hoopes is our Marketing contractor. Follow Savvy Psychologist on Apple Podcasts, Spotify, or wherever you listen to podcasts. That's all for this episode of Savvy Psychologist. Thanks for listening! I'll see you next week.