The psychology of money: Saving and spending habits

profile Erin Bruehl  |  June 15, 2021

You know you shouldn't spend every dime you make. You know you should set something aside for a rainy day. But as the months come and go, you find that you just can't make a savings resolution stick. What's going on?

The psychology of saving money could be to blame.

All sorts of factors sit just below the surface of your consciousness, and they pull and prod at you every single day. They could keep you from saving money even though you want to do so.

But you can change course. Follow a few simple steps based on psychology, and you can prepare for the future.

5 Factors That Make Saving Difficult

Why can't you save money even when you know it's the right thing to do? Researchers crafted in-depth studies to answer this question, and what they found could change the way you think about your bank account.

These are five primary reasons most people can't set money aside.

1. We Don’t Make Enough

It’s hard to save money if you simply don’t make much. When you live paycheck to paycheck, it can be hard to cover day-to-day living, let alone put enough aside to save for the future.

2. Spending Is Addictive

You see something you want, and you don't even think twice. You slip the item into your shopping cart and make it your own. This seems like a rational decision, but the part of your brain associated with pleasure lights up as you make your purchase.

This brain area also lights up when we're exposed to substances like:

  • Alcohol
  • Cocaine
  • Heroin

In time, our brain cells crave the hit of chemicals and the surge of activity. The need can keep us in spending mode, even when our purchases mean we save less.

3. Rewards From Savings Aren't Immediate

Spend money, and you'll get a jolt of happiness and an item to call your own. Save money, and it can feel like you get nothing at all.

Stashing money away in an emergency account, for example, could help you cover a financial crisis, such as a flat tire or an unexpected medical bill. When you need your savings, you're glad to have them.

But when you don't have an immediate emergency sitting right in front of you, saving money can seem like depriving yourself of something you could have right now.

4. We Save Only When We Think We Can

It's easy to assume that only rich people save money. But studies suggest that isn't always true. For example, researchers split people into three groups:

  1. A group that had money and knew it
  2. A group that didn't have money but didn't know it
  3. A group that didn't have money and knew it

Group 1 saved money, and that seems obvious. But group 2 saved money too.

When we're faced with tough financial decisions and cuts seem necessary, saving comes first. But clearly, some people save even when their peers wouldn't make that decision. Research like this suggests savings habits stem from confidence rather than from dollars and cents.

5. We Save (or Don't) Like Our Parents

Experts say we carry around a set of "money scripts," shaped by the communities we live in and our childhood experiences. When faced with a financial decision, those memories and behaviors shape what we do, and it happens in a nanosecond.

For example, you may have grown up in a household in which:

  • Savings were rare. Your parents, grandparents, aunts, and uncles all lived paycheck to paycheck.
  • Spending was easy. The corner market stayed open all night, and you learned how to make online purchases before you could read.
  • Spending money was a reward. When you got good grades or your team won a game, you got something you wanted in return.

If you're faced with a monthly budget, all of those habits and memories color your decisions. You might find yourself skimping on savings and prioritizing spending instead.

5 Ways to Master the Psychology of Saving Money

Psychology underlies how we act and react to any given situation. Our impulses are quick and almost automatic. But with a bit of discipline and practice, you can change the script and make different decisions.

These are five great steps to try.

1. Consistently Spend Less Than You Make

Every financial expert out there will tell you that saving begins with curbing spending. If every dime you make goes to purchases, you'll have nothing left to save. But even though experts recommend this step, they also acknowledge that it's difficult to take it.

A budget can help. Write down your:

  • Income. Keep track of how much lands in your account after tax withholding.
  • Recurring expenses. Track your rent, utilities, scheduled car payments, and other monthly fees.
  • Scheduled, but non-repeating, expenses. Tax prepayments, upcoming birthday gifts, holiday expenses, and other similar fees should also appear in your budget.

Each month, track how much you must spend and ensure that you're never on the hook for more than you earn.

Automation makes budgeting a bit easier. We give our customers access to money management tools. Look over account balances on our homescreen, review our spending notifications for every purchase you make, and you'll know exactly how much you spend and where. You can plan accordingly and create budgets right in our app.

2. Develop Firm Plans for the Future

Financial experts say planning for the future has a deeper impact than simply learning about financial concepts. When you know what you're saving for, you'll be motivated to stick to your resolutions.

Think about where you'd like to be in 2, 5, or 10 years. Consider:

  • Living arrangements. Would you rather keep the flexibility involved with renting, or do you want to own a home?

  • Work/life balance. Do you want to work 40 hours per week? Or will you retire or cut back hours?

  • Family ties. Will your parents or children need your financial assistance?

  • Prized possessions. Will you want a new car? New equipment for a hobby you're passionate about

Arrange these goals into small chunks, and you're on your way to a savings habit. For example, if you'd like a new car in 5 years, determine how much you'd need to save each month to allow you to buy it without a loan.

3. Celebrate Your Small Successes

With firm savings plans set, you'll begin to meet critical milestones. Make your progress visible, and you're more likely to stick with your plan.

Seeing progress toward a reasonable goal can boost your motivation, and it can keep you grounded when you face a financial setback or challenge.

If your goals take years to achieve, break them into small pieces. If you hope to save up to retire by age 65, for example, determine how much you'd need to save by your birthday each year. When it arrives, snack on that forbidden bowl of ice cream as a special treat.

Our Savings Pods can keep you motivated too. Each time you put money in your pod, we'll show you how close you are to meeting the financial goal you've set for your family. Log into the app, and you'll get a visual representation of your hard work.

4. Save Automatically

Beat back a case of low willpower with automation. You won't be asked to decide to save money. Instead, the funds go toward savings without any thought on your part. Saving automatically is one of the best and easiest ways to move past a psychological barrier into a healthier future.

Our Savings Pods can help with this too. Set a goal, and move money into your Savings Pod. We can also round up all of your purchases to the nearest dollar and put the difference in your pod. You can add to this amount, of course. But we'll help you along with automatic savings.

5. Make Savings a Habit

Saving money doesn't always seem fun. But master the skill, and you'll be better prepared to handle the ups and downs of everyday life. And the more you save, the better you'll get.

Habits form with time and repetition. With each dollar you choose to set aside, you're reinforcing this new behavior. Saving the next dollar might be a little easier.

Never forget that you're trying something new. But know that you're creating a habit that can stick with you throughout your entire life.

Join Us

At Current, we know saving money isn't easy for every family. That's why we've built so many tools to help everyone set aside money for goals both large and small.

Sign up in just 2 minutes!


How to Train Your Brain to Save More Money, According to Psychologists. ((March 2019). NBC.

You Don't Have to Be Rich to Save Money: On the Relationship Between Objective Versus Subjective Financial Situation and Having Savings. (April 2019). PLOS ONE.

You Really Want to Save Money — But Aren't. The Reason Why May Surprise You. (May 2019). NBC.

4 Steps to Cultivate the Habit of Saving Money. (March 2018). Psychology Today.

The Psychology of Saving Money. Consumer Affairs.

Willpower, Finances, and Spending. (2012). American Psychological Association.

The Psychology Behind Saving in the 21st Century. (May 2015). Forbes.

Exploring the Psychology of Saving. (March 2019). WKMS.

Banking services provided by Choice Financial Group, Member FDIC. The Current Visa Debit Card is issued by Choice Financial Group pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.

Share this story:

Suggested Reading

You're almost in

Enter your phone number below and we'll send you a link to download the app to set up your account.

Download the app

Welcome to the future of banking! You're almost done, just download the Current app for your device and complete your account set up.