The psychology of spending: Why we buy what we buy

You might know this situation all too well: you’ve just finished your weekly shop, confidently ticked everything from your list, and are making your way to the till.

As you wait in the queue, your favourite snack catches your eye. You know you don’t need it – your trolley is already full of food – but before you realise it, you’ve reached out for it and placed it on the conveyor.

You might even experience this same behaviour online. You start by searching for essentials during a big sale, only to find your basket full of “bargains” you never intended to buy.

If any of this sounds familiar, then you’re not alone. VoucherCodes reveals that 88% of Brits make impulse purchases at least once a month. The same source states that, on average, adults in the UK spend more than £600 each year on these spontaneous buys.

It’s important to remember that spending isn’t always rational. In fact, it’s often shaped by emotional, psychological, and social influences below the surface.

There’s a whole science behind these behaviours, and understanding the psychology of spending could help you make more informed choices in your financial life – continue reading to discover how.

Impulse spending is often driven by an emotional response or cognitive bias

The phrase “impulse spending” generally refers to making unplanned purchases in the heat of the moment. These decisions often arise without careful consideration and are typically triggered by emotion.

For instance, you might buy something because you feel stressed, bored, or excited. Sometimes, it even feels like a reward or a small treat, much like “retail therapy”.

Cognitive biases can also play a role.

One of these is the “fear of missing out” (FOMO), which can make you act quickly when you see a message such as “only two left in stock.”

Anchoring bias can also affect your perception of true value. When an item is listed at 50% off, your brain may focus on the discount rather than assessing whether the reduced price is genuinely good value.

Impulse buying can even activate your brain’s reward system. Each spontaneous purchase may trigger a release of dopamine, the brain’s feel-good chemical, reinforcing the behaviour and making it more likely to happen again.

This might explain why impulse spending often feels so good in the moment, even if it leads to buyer’s remorse later on.

Impulsive decisions when you’re managing your finances could mean you stray from your financial plan

Impulse spending might seem like a day-to-day issue, but it can actually affect more significant financial decisions.

Indeed, these psychological biases that lead to unplanned purchases can influence your behaviour when investing your wealth.

FOMO, for instance, might tempt you to invest in a trending company or asset simply because everyone else is doing it, regardless of whether it aligns with your goals or appetite for risk.

Similarly, anchoring can cause you to focus on an investment’s past performance, leading you to hold onto it for too long, even when it’s no longer appropriate for your unique circumstances.

Over time, emotionally driven decisions can result in missed opportunities or long-term financial setbacks.

That’s why recognising these behaviours is essential, and simply pausing and reflecting can help you avoid acting on impulse.

Working with a financial planner can also make a difference. At Douglas White Financial Planning, we can act as an objective sounding board, helping you stay accountable to your goals and focused on the long term.

With our support, you may find that you’re more likely to take a measured approach rather than reacting to short-term emotions or market noise.

Advertising also influences your spending habits through emotional appeal or social proof

Modern advertising is designed to do more than simply inform – it persuades, nudges, and even encourages you to act without fully realising it.

Marketers understand how your brain works and use this knowledge to influence your choices in subtle, but powerful, ways.

For instance, they might link a product to an emotional appeal, such as happiness, nostalgia, or success. A car advert, as an example, might invoke a sense of freedom, while a fragrance might suggest romance.

Advertising isn’t limited to TV screens, either. Social proof – seeing others enjoy or recommend a product – can drive a desire to purchase something you previously had no need for.

Many brands might also rely on authority bias, using celebrities, influencers, or “experts” to create trust and boost credibility.

Of course, these techniques aren’t necessarily manipulative in themselves. Yet, they are designed to tap into your emotional response rather than reason. Over time, they can influence your habits and spending behaviour more than you might expect.

Advertising could contribute to “lifestyle creep” or even encourage emotional spending

Advertising can subtly shape how you manage your money, including your lifestyle expectations and sense of what “success” looks like.

Indeed, as your income grows, you may find yourself increasingly exposed to messages that encourage you to upgrade your lifestyle.

This gradual shift – often referred to as “lifestyle creep” – might begin with minor changes, such as choosing a more expensive bottle of wine from the shop or buying coffee from a café each morning.

Read more: What is “lifestyle creep” and how could it affect your finances?

This can eventually lead to more significant spending habits, such as upgrading your phone regularly or eating out more frequently.

There’s nothing wrong with treating yourself, of course, especially if you’ve worked hard to earn it. Still, it’s crucial to maintain a balance between enjoying today and preparing for the future.

Advertising can also encourage emotional spending, especially during periods of stress or uncertainty. While this is understandable in small doses, habitual spending may quietly pull you away from your longer-term goals.

This is where we can provide valuable perspective. By helping you clarify what truly matters – whether it’s supporting family, retiring comfortably, or leaving a legacy – we can guide you in shaping spending habits that support both your present and your future.

Get in touch

We could help you deal with some of the many spending habits affecting how you manage your wealth.

Email info@douglaswhiteltd.com or call 0151 345 6828 today for more information.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.