How Understanding Your Emotions Can Lead to Healthier Financial Habits

ByNathan Astle

This article was originally published in Psychology Today on April 24, 2025. Nathan Astle is a monthly contributor to Psychology Today.

Want to Spend Smarter? Start by Naming Your Feelings

In our culture, we’re often told that if we just work harder we can overcome any obstacle, including our financial difficulties. But most of the time, it’s not that simple. Our money habits are shaped by our daily decisions, emotions and ingrained beliefs. In a recent survey commissioned by Beyond Finance, half of respondents said they don’t trust themselves to manage their finances effectively, with only 13% feeling “very good” about their current financial state. As we observe Financial Practice Week and Financial Literacy Month this April, it’s a perfect time to explore what it really takes to change financial behaviors and achieve financial wellness.

Understanding the Emotions Behind Money

The myth that financial success is simply a product of self-discipline does a disservice to anyone struggling with money and debt. In reality, around 90% of our financial behaviors are driven by emotions. Whether it’s happiness that spurs us to treat ourselves or sadness that nudges us toward impulsive buying, the majority of spending decisions originate from a complex mix of feelings and unmet needs. To understand the emotions at play, you must understand what triggers financial behaviors and name the emotion. First, ask yourself why you feel the need to spend. Was it a long day at work or did you have a good day, and feel the need to celebrate that? Once you know the reason, ask yourself what emotion is fueling the behavior. Are you buying because you’re sad and need comfort? Is fear prompting you to make short-term “doom spending” decisions? Pinpointing these feelings opens the door to building better financial habits.

Understanding How Our Money Stories Affect Spending

For many, financial behaviors are not simply habits but stories that trace back to past experiences, cultural messages or even stress. Understanding where your behaviors come from is essential to healing. Try something like the money timeline to reflect on significant financial moments, including early financial stressors, culturally-informed messages and negative experiences related to money. In my weekly financial therapy sessions with Beyond Finance clients, I’ve seen how cultural and gender-based socialization influence feelings toward money. Acknowledging that your behavior is partly a product of your environment can empower you to seek out strategies that address the underlying causes of financial distress.

Creating Sustainable Financial Change

Transforming your money behavior isn’t about having more self-discipline; it’s about using practical tools to process your emotional responses. Here are my top tips for making lasting change:

  1. Track emotional patterns with a money journal: Start by tracking what you spend and how you feel before and after that spending. Over time, you’ll see patterns emerge. You might notice that after a stressful meeting, you’re more likely to indulge in online shopping. By linking emotion to expense, you can begin to address the underlying need — like seeking connection or comfort — in healthier ways.
  2. Delay and reflect: In the middle of an emotional high or low, a purchase can feel urgent. A simple “pause” strategy allows your initial surge of emotion to subside. Put items in your cart, then step away for at least 24 hours. Often, when the temporary emotional state dissipates, so does the impulse to spend.
  3. Redefine accountability: Change is more manageable when you’re not alone. Whether it’s a trusted friend, a partner or a professional counselor, having someone to talk to can make a world of difference. A simple commitment, like having a loved one occasionally ask, “How are you really doing with your spending?” reinforces both emotional support and accountability.
  4. Create a rewarding routine: Setting aside a dedicated “money meeting” with yourself each week can further cement long-term change. These meetings should be short, enjoyable sessions where you review your financial goals, track progress and audit your spending habits. Your weekly money meeting doesn’t have to feel like another chore. Make these meetings fun with a small treat or a visit to your favorite coffee shop so that you have something to look forward to.

Moving Forward with Intention

Changing money behaviors is about intentional, gradual adjustments informed by self-awareness and self-compassion. When you understand the emotions (and emotional needs) behind purchasing decisions, you can equip yourself with the tools to meet those needs in healthier ways. 

Remember, sustainable change happens one small step at a time. Taking time to pause, reflect and choose differently is the first step on the journey to a more positive and holistic relationship with money.