Last Updated on February 7, 2025 by Daniele Lima
If you feel like your money disappears before the end of the month, that your debts never end, and that saving or investing seems impossible, know that you are not alone in this psychology of spending. Most people face financial challenges, but the good news is that there is a way out of this cycle.
The difference between those who sink into debt and those who prosper financially is not just in how much they earn, but in the way they think and deal with money. Let’s explore how to get out of the financial crisis through the four essential pillars of wealth: earn, spend, save, and invest.
If you believe that investing is not for you or that saving is impossible, read on. This article may change the way you see money and help you rebuild your financial life.
Table of Contents
How to Increase Your Income: Smart Money Psychology
If you are in debt, it is essential to understand that you can’t save what you don’t have. Many people try to cut expenses but forget that the best way to get out of debt is to increase your income.
What people in debt think:
- “My salary is fixed, there’s no way I can earn more.”
- “Only a raise would solve my problems.”
What financially free people do:
- Look for extra sources of income – Freelancers, side jobs, online sales, courses, consultancies.
- Take advantage of forgotten skills – Teaching, writing, programming, cooking, organizing.
- Understand that time = money – Instead of watching TV or social media for hours, they look for ways to generate income.
Practical Example Ana was a teacher with R$15,000 in credit card debt. His salary did not cover the interest. Instead of waiting for a raise, she started tutoring online. In 4 months, he paid off half of the debt and, in 8 months, he was completely free of it.
What can you do now?
- List 5 things you know how to do well.
- Research ways to make money from them.
- Dedicate at least 5 hours a week to this.
Money Management Psychology: Controlling Spending Habits
What People in Debt Do:
- Spend before paying debts and essential bills.
- Buy to relieve emotions (sadness, anxiety, stress).
- Use credit as an extension of their salary, without control.
What Multimillionaires Do:
- Create a fixed spending plan – They know exactly how much they can spend and follow that plan.
- Postpone unnecessary purchases – Wait 24 hours before any non-essential purchase.
- Use money for, not against – Pay debts first, spend later.
Practical Example
Carlos earned R$5,000 a month, but he was always in the red. He made a simple budget:
- 50% for essential bills
- 30% for leisure
- 20% to pay off debts
In 6 months, he got out of his overdraft.
What Can You Do Now?
- Write down all your expenses for 30 days.
- Find at least 3 unnecessary expenses to cut.
- Use the money saved to pay off your debts.
Expert Resources on Financial Management
Psychology Behind Saving Money: Building Better Habits
“But I can barely pay the bills! How am I going to save money?” If this is your doubt, take a deep breath. Saving doesn’t mean saving thousands of dollars overnight. Start small, but start.
What people in debt think:
- “I’ll only save when I have money left over.”
- “I don’t earn enough to save anything.”
What rich people do:
- Save BEFORE you spend – They put a portion of the money in a separate place before any expenses.
- Automate the economy – Set up automatic transfers to a reserve account.
- Use the 1% rule – If you can’t save 10%, start with 1% and increase it over time.
Practical Example João had a salary of R$3,500 and lived on an overdraft. He started saving just R$50 per month. Over time, it increased to R$200 and, in 1 year, managed to earn R$2,400. This money saved him from emergencies and avoided new debt.
What can you do now?
- Set aside R$ 10 this week.
- Put this money in a separate account.
- Keep the habit and increase the amount little by little.
Investment Psychology: Breaking Mental Barriers
If you think that investing is only for the rich, you are wrong. Investing is not a luxury – it is a necessity. If you don’t invest, money loses value due to inflation.
What people in debt think:
- “Investing is risky.”
- “I need a lot of money to invest.”
What financially free people do:
- Invest before you have a lot of money – They start small and grow over time.
- Learn the basics of investing – Fixed income, real estate funds, shares, and private pension.
- Turn money into passive income – They make money and generate more money.
Practical Example Maria started investing R$100 per month in Tesouro Direto. In 5 years, I already had more than R$7,000 accumulated. This money helped pay for an emergency without having to go into debt again.
What can you do now?
- Download an investment app and open an account.
- Invest R$10 in Tesouro Direto to learn.
- Read about investing for 10 minutes every day.
📋 Smart Money Habits Checklist
Use this interactive checklist to track your financial habits and improve your money management skills.
✅ Daily Habits
- Check account balances
- Record all expenses
- Review upcoming bills
- Identify emotional spending triggers
✅ Weekly Habits
- Review spending patterns
- Plan next week’s expenses
- Update budget tracker
- Check progress on financial goals
✅ Monthly Habits
- Review and categorize all expenses
- Calculate savings rate
- Update net worth tracker
- Plan next month’s budget
Learn more about how to break bad money habits.
Explore proven budgeting strategies to take control of your finances.
Breaking Bad Financial Habits: Your Action Plan
If you are stuck in a cycle of debt and don’t know how to get out, the first step is to change your mindset. Don’t wait until you “have money” to start – start with what you have now.
- Earn more by exploring new sources of income.
- Spend smartly, avoiding unnecessary purchases.
- Save first, even if it’s just a little at first.
- Invest, even if it is with minimum values.
The biggest barrier between you and financial freedom is not your salary, but your financial habits. If you change the way you think and act with money, your financial reality will change too.
Are you ready to get out of debt and build a better future? The choice is yours.
Frequently Asked Questions About Psychology of Spending
How does psychology affect spending habits?
Psychology influences spending through emotions, impulses, and learned behaviors. Understanding these triggers helps you make better financial decisions and develop healthier money habits.
What are the most common psychological barriers to saving money?
Common barriers include instant gratification bias, fear of missing out (FOMO), emotional spending to cope with stress, and the belief that small savings don’t matter. Recognizing these patterns is the first step to overcoming them.
How can I break the cycle of emotional spending?
Break emotional spending by implementing a 24-hour waiting rule for purchases, identifying your spending triggers, and finding alternative ways to cope with emotions, such as exercise or hobbies.
What are the psychological benefits of saving money?
Saving money reduces stress, increases feelings of security and control, improves self-esteem, and provides peace of mind knowing you have resources for emergencies.
How do I develop a healthy money mindset?
Develop a healthy money mindset by setting clear financial goals, tracking your spending, celebrating small wins, and surrounding yourself with financially responsible people.