THE PSYCHOLOGY OF SPENDING
- Derek Hagen
- 1 hour ago
- 3 min read
❝We have a natural tendency to compare ourselves to otehrs, but this often leads to unhappiness.❞ -Daniel Gilbert
You don't just spend money. You anticipate it, experience it, and remember it.
We rarely make spending decisions based on pure logic. Even those who describe themselves as analytical or numbers-driven still react to emotions, expectations, comparisons, and memories.
You might already have a hunch that money itself doesn’t create well-being. But how we use our money and how we experience it often determines the real payoff.
If you're interested in values-based financial planning, here's how to work with a Money Quotient-trained financial life planner.
And that payoff is shaped by three stages of every purchase:
Anticipation
Experience
Memory
These stages follow a predictable psychological pattern that we can use to our advantage.
ANTICIPATION: THE JOY BEFORE THE EXPERIENCE
The first stage of spending happens long before the money leaves your account. Anticipation is the mental runway leading up to something you’re looking forward to.
This “looking forward” time can create excitement, optimism, and even a sense of reward. Economists call this anticipatory utility, the emotional value we get from imagining something good ahead.
You probably know this feeling:
The countdown to a vacation
Knowing a package is on the way
Planning a dinner or weekend that lifts your mood all week
Sometimes we accidentally skip this stage — like when someone surprises you with a trip, and you lose weeks of joyful anticipation.
Understanding anticipation helps you spend with more intention: sometimes the waiting is part of the pleasure.
THE EXPERIENCE: THE MOMENTS THAT BECOME MEMORIES
Most people assume this is where the “real” happiness happens. But it’s more complicated than that. The experiencing self lives the moment, and that moment often passes faster than we expect.
One way to increase the emotional value of an experience is through savoring, slowing down enough to feel it.
Savoring might mean:
Taking in the view before snapping the photo
Sitting for a moment before tasting your food
Letting a conversation linger instead of rushing to the next thing
Savoring stretches the moment long enough for it to sink in.
But there’s another twist: you don’t remember the moment the way you lived it.
Psychologist Daniel Kahneman found that we remember experiences mostly by two things:
The peak: the most emotional moment
The ending: how it wrapped up
This is why:
One magical moment can redeem an entire trip
A rough ending can overshadow an otherwise good day
A simple “closing ritual” can transform how you remember something
If you want experiences to feel meaningful in hindsight, a good ending matters.
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Money is the number one source of stress in people's lives, above work, health, and kids. People with money disorders typically have faulty beliefs about money and cannot change their behavior even though they know they should. |
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MEMORY: THE STORY YOUR BRAIN KEEPS
Memory is the phase that lasts the longest, and it heavily influences which purchases you feel good about.
Psychologists describe two versions of you:
The experiencing self: who lives the moment
The remembering self: who tells the story afterward
Most of your future choices come from the remembering self.
And that self does something interesting. This is euphoric recall, your tendency to remember the highlights and soften the hassles.
It’s why people say, “Everything went wrong on that trip… but honestly, it was great.”
Your memory edits the story, usually in your favor.
SPEND ON WHAT YOU WANT TO FEEL
You’re not just buying the thing.
You’re buying:
The anticipation leading up to it
The experience while it’s happening
The memory that stays with you afterward
When you think about spending this way, the question becomes: What feeling do I want before, during, and after this purchase?
Money doesn’t just change your circumstances. It shapes your emotional life. When you understand anticipation, savoring, endings, and memory, you can make spending choices that feel more meaningful and satisfying.
Because good spending isn’t about perfection, it’s about being intentional with the moments money creates.
And some of those moments begin long before you buy anything... and last long after the purchase is over.
You get one life; live intentionally.
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REFERENCES AND INFLUENCES
Ariely, Dan & Jeff Kreisler: Dollars and Sense
Budd, Chris: The Financial Wellbeing Book
Clements, Jonathan: How to Think About Money
Dalai Lama & Howard Cutler: The Art of Happiness
Dunn, Elizabeth & Michael Norton: Happy Money
Gilbert, Daniel: Stumbling on Happiness
Kahneman: Daniel: Thinking Fast and Slow
Wagner, Richard: Financial Planning 3.0
