Psychology of Spending: 3 Reasons Why We Spend on Things We Don't Need

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How to stop spending

One of the most frequently asked questions that people with an intense love for shopping ask is, “How do I stop spending money?”.

This question has long puzzled psychologists, due to a bias that assumes people make rational, thoughtful decisions at all times. For those of us that struggle with spending, we can attest this isn’t always the case.

This was further confirmed in the late 1980s. Today, while a large number of people spend money like there’s no tomorrow, they’re also Googling the words, “How to not spend money?” or “How to stop wasting money?” and other variations of the question.

Surely there must be a reason for this? There is, and that’s exactly what we are going to discover in this article. 

Not only will we discuss the psychology of spending, but also three major psychological conundrums that make us want to spend unnecessarily. 

Now let’s get started!

The Psychology of Spending

As we mentioned before, according to psychologists Susan Fiske and Shelley Taylor, for the most part, humans do not think rationally. “For the most part” is the key here. 

Our brains have developed in a way that prevents us from using up a lot of energy in order to save it for dangerous situations.

This leads us to make decisions that are easier and more pleasurable in the short term, over decisions that are rational and bring rewards in the long run.

Even though we don’t want to admit it, it means that many of us are wired to take shortcuts when it comes to decision making. 

Perhaps this is something you can relate to? It’s possible that our brains choose to do this because they prioritise things that are more important to our survival.

Therefore, most of our spending decisions, being not that important to our survival, are made by our subconscious mind, which, as we said, is not very rational.

3 Reasons Why We Spend

Now let’s take a look at the three major factors that drive us toward unnecessary purchasing and find out how to stop spending money.


Scarcity. Every time our subconscious mind is reminded of the scarcity of something, it directs us to get it. As hunter-gatherers, early humans were often driven by necessity - finding safe food, water and shelter was energy-intensive and often in short supply. Things were scarce.

Therefore, when one witnesses a product or service which has a high demand and not enough supply, it makes them think that they are missing out on something. 

Although this is perfectly understandable as a human response, it is also marvellously milked by the leaders of consumerism. In other words, marketing analysts, campaign creators, and other people with similar professions. 

Peer / Social Pressure

There’s an old adage that says we often buy things we don’t need, to impress the people we don't really like. Well, that’s what social or peer pressure is.

Even though we budget for certain expenses, we sometimes decide to go overboard in order to stay a part of a particular social group.

This may involve staying for another drink at a bar with friends or buying another t-shirt just because your friends say, “It’s pretty and would suit you.”

Delayed Reward Discounting

Although the term sounds complex, its explanation is pretty simple and the concept is something all of us have come across at some point in our lives. However, you might not have paid attention to it until now.

Delayed reward discounting is a process opposite of delayed gratification. Under DRD, one chooses short term rewards over long term rewards.

Let’s say you’re trying to save up for a product that you really need. However, while shopping, you see another product that you can afford right now and it will make you relatively happy.

Well, guess what you’re gonna do? Probably buy the one you can afford right now so that you won’t have to wait for a greater reward much later in time. In this case, the product that you were saving up for.

There is a very good social experiment done on children that illustrates this concept marvellously called the 'Marshmallow Test'. 

If you sit a child down and tell them that they can have one marshmallow now, or two marshmallows in 10 mins' time, the child will likely choose one now. 

This is really interesting because children don't generally have a good grasp of time, so the 10 mins could never come for them - and it's a similar thought process adults go through.

Hence, the next time you see a board that says only 2 left, find yourself being a victim of peer pressure or feel the urge to buy something due to DRD, just avoid the temptation and really process whether you need the purchase or not.

Get “More Than Your Score Loans” With Salad Money

Are you troubled by your spending habits? Hopefully you’re now armed with some tips on how to tackle the issue and efficiently use the above knowledge to avoid further expenses. However, if your spending has got you into trouble, Salad Money can help. Take a look at our ‘More Than Your Score’ loans to better manage your finances.

You can also refer to some of our articles about financial and debt management, and understand how our loans can help you get out of debt. 

What’s more, with our fair lending practices and unique affordability assessment, you can get a loan without having to worry about your credit score.

To learn more about our affordable loans, visit our homepage or call us now!

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