What Motivates Us to Spend and Save Money?

by Adam on October 18, 2011

The psychology of saving is a fascinating subject. Understand why you spend and why you save and financial goals become a LOT easier to reach. That’s why I’m really pleased to be able to share this guest post today to help you you grow your pennies!

Why do you spend money?

Why do you save money?

There are many things that motivate people to do one or the other, and often we are predisposed one or the other. You probably have a stingy friend or relative that everyone makes fun of for holding on to their money, just as you know someone else equally motivated to spend whatever money they can get their hands on. But as you know, finding a happy medium between spending and saving is essential to your overall well being as well as your long term financial and personal success.

Once you know what motivates you to spend and save, it is easier to organise your finances and make the best possible decisions. So let’s take a look at what makes us tick!

Motivations to Spend

While there is nothing wrong with spending money, going overboard can quickly lead to a multitude of money related issues. Here are three of the key motivating factors behind spending money:

Wanting to have a good time:

Most people are motivated by having fun, either alone or with others. Even though there are many ways to have fun for free, a lot of people feel that the more they spend the better time they will have. All those crazy weekends where the budget gets tossed out the window pays testament to that.

To feel better about yourself:

Do you tend to spend when you are having a bad day or are looking to improve your self-confidence? If you just answered yes to one or both of these questions, there is a good chance that you are in the habit of spending money to make yourself feel better. While this may be motivation to spend, it often results in a short lived bliss. Soon enough, you will have buyer’s remorse as you realise that spending money did nothing to change your situation. And worse yet, you could end up with the burden of debt looming over your life, compounding any emotional or personality issues that made you spend in the first place.

Doing something nice for somebody else:

No matter if you are buying a gift for a special occasion (birthday, Christmas, anniversary, etc.) or just to show how much you care, you may be motivated to spend on the basis that the recipient will realise the importance. In situations like this it can be veryeasy to spend more than you can afford to spoil the recipient, show them how much you appreciate them, or simply to show them (in a rather selfish way) how good you are to them.

Motivations to Save

For many people, saving money is a way of life. For others, this is a struggle day after day. Here are three of the biggest motivations to save:


Are you afraid that you will run out of money in the future? Are you afraid that you will lose your job and not be able to pay the bills? Fear, uncertainty and doubt, aka FUD, is perhaps the biggest motivation to save. It can be very difficult to get money related fears out of your mind, especially if you are the sort of person who likes to be in control. However, as you save more money this feeling may begin to subside and gradually be replaced by a growing sense of security.

Security for the future:

If you want to maintain your standard of living and have a good lifestyle in the future, particularly during retirement, you better begin to save today. The more money you save today, the more security you will have in the future. In many cases, security for the future and fear go together hand in hand. In other words, you may be afraid you are not saving enough now to feel secure later in life.

So that you can purchase something big in the future:

Are you motivated to save for a dream vacation to a tropical destination? How about that sports car you have had your eyes on for so many years? Saving for something in particular, especially something that you really want, may be all the motivation you need to count the pennies. Saving up to pay for something in cash is a sound principle to stick by, and one that can save you a lot of money and stress.

Contributed by Andy at CreditCardCompare, the free credit card comparison service for Australians. Andy also helped to curate their learning centre, which is a repository of useful personal finance guides and resources.

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