The Psychology of Money: How Do Our Emotions Influence Our Finances?

Last updated by Rosie Harlow

"I’m feeling good, so I spend. I’m feeling bad, so I spend even more! Does that sound familiar? Well, it does to me too—it’s exactly how I handle money. I spend to comfort myself or to reward myself… Clearly, I let my emotions completely influence my finances. But this is absolutely not healthy! To better understand how our emotions affect our finances, I decided to dig deeper into the topic. Because, over time, this behavior ends up putting me in a tricky financial situation…"

The Psychology of Money: How Do Our Emotions Influence Our Finances?

Emotions + money = 💸💸💸

I’m not the only one who lets emotions influence financial decisions 😅. According to American psychologist Brad Klontz, when we experience negative emotions, we often turn to money as a way to cope.

This is known as a compensatory strategy, a defense mechanism to deal with uncomfortable feelings. However, strong positive emotions, like excitement and euphoria, can also lead to impulsive spending. Psychiatrist and addiction specialist Jean-Michel Oughourlian explains that this behavior is often driven by a desire for instant gratification.

But regardless of the type of emotions we feel, the consequences are often the same and can be particularly challenging to manage 😓…

The disastrous consequences of emotional spending

The problem is that emotional spending can lead to unstable situations, which in turn increase financial stress.

👉 For instance, I once bought a three-digit dress because I had been a victim of fatphobia, and it really hurt me. To feel better and beautiful, I bought a dress way beyond my budget. But later, I quickly regretted it when I realized I didn’t have enough money to pay my bills 😱…

By doing this, we trap ourselves in a vicious cycle, feeding into the fear of lacking, financial insecurity, debt, and so on. And this happens regardless of the emotions that triggered the spending.

Did You Know?

A study by Brad Klontz revealed that people with an emotional relationship to money tend to have lower incomes and feel less satisfied with their financial situation 🙁.

Why do we mix emotions and money?

One question I’ve asked myself is: why are we so influenced by our emotions when it comes to money? One reason, as psychiatrist Serge Hefez explains, is the model we were exposed to in childhood.

Indeed, our parents pass on their own relationship with money. If their emotions dictated how they managed money, we’re likely to do the same. For me, this is absolutely true! I always saw my mom making impulsive purchases based on how she felt. Sometimes she spent because she was sad or anxious, other times she rewarded herself because she was happy 😫.

A woman shopping

However, our emotional relationship with money is also heavily influenced by the capitalist and consumerist society we live in 🤑…

A society that plays on emotions

As sociologist and philosopher Zygmunt Bauman highlights in his book "Liquid Life," in our consumer society, emotions have become a commodity, exploited by marketing to make us buy more and more.

Advertising and marketing tap into our emotions to create artificial needs and desires. Marketers use persuasion techniques based on cognitive biases to push us to spend. After all, our society is all about appearances, where shopping is an emotional and identity-driven experience, as philosopher Gilles Lipovetsky notes.

👋 You might also like: Economic Abuse: Subtle but Still Present

Working on emotions to avoid insecurity

So how can we break free from this emotional relationship with money? It’s not about suppressing emotions—that’s impossible—but rather learning to identify and embrace them, using them constructively in our financial decisions. This is what I’m trying to do through therapy, to manage my finances more healthily and avoid financial situations that cause a lot of anxiety 😖.

Additionally, we need to understand that owning things won’t make us better people. Psychologist Tim Kasser encourages us to cultivate healthier values rather than seeking satisfaction in material consumption. Of course, detaching emotions from money is a long process, but becoming aware of it is already a first step toward a more balanced relationship with money.

💰 Need a little help? Check out our cash stuffing challenge—it might help!

Editorial Note: Take Care of Yourself to Heal Your Relationship with Money

Ultimately, money isn’t just about numbers—it’s also about well-being. Our emotions, fears, and joys all reflect in how we spend. The good news is, we have the power to change this dynamic. 🌱 I won’t lie, breaking free from the cycle of spending to fill an emotional void isn’t easy. But recognizing this pattern is already a step toward a healthier relationship with money. And remember, you’re not alone in this process. Sometimes, seeking help is necessary to understand what’s going on inside us.

🤗 Understand yourself, accept yourself, and be happy… It starts here and now!
#BornToBeMe

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Article presented by Rosie Harlow

Writing has always been a form of therapy for me. For as long as I can remember, I have always used paper as a punching bag. Get to know me, I am Rosie Harlow.

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