Times Your Brain Lied to You About Money

May 30th, 2025

5 min read

Unexpected Ways Your Brain Twists How You See Money

Uncover how your mind can distort money decisions. This guide breaks down common psychological traps and offers tips to take control of your financial habits.

Unexpected Ways Your Brain Twists How You See Money

Money decisions are rarely as rational as we like to think. Even if we believe we're logical and in control, our brains can play tricks on us, leading us to spend more, save less, and make choices that aren't in our best financial interest. These mental shortcuts and emotional biases—built from years of habits, experiences, and even survival instincts—can sabotage our best intentions.

Here are seven ways your brain might be quietly lying to you about money and what you can do about it.

1. "I Deserve This" – Justifying Impulse Spending

After a long day or a rough week, it's tempting to reward yourself. A new gadget, a fancy dinner, or those shoes you’ve been eyeing feel like a deserved treat. That’s your brain engaging in what psychologists call moral licensing. Because you did something “good” (like working hard or exercising), you feel entitled to indulge.

But this thinking can create a dangerous habit of equating effort with the right to spend, even when it doesn't fit your budget.

What to do instead: Build small, planned rewards into your budget. When treats are intentional and accounted for, they feel just as good, without the guilt or financial strain later.

2. "I’ll Save More Later" – The Procrastination Bias

Future-you always seems to have it together. You imagine you'll earn more, have fewer expenses, and finally start saving seriously next year. But next year often looks a lot like this one.

This is your brain deferring responsibility. It's an easy trap because saving doesn’t come with the same instant gratification as spending.

What to do instead: Start small and automate your savings. Even a few dollars a week makes a difference over time. Removing the decision from your hands makes it harder for your brain to negotiate with itself.

3. "It Was on Sale, So I Saved Money" – The Discount Illusion

We've all been there: proudly walking out of a store with something we didn’t plan to buy, just because it was 40% off. The feeling of getting a deal activates our brain’s reward system, often overpowering the question of whether we even needed the item.

The result? You’re not saving—you’re spending money you wouldn't have otherwise.

What to do instead: Before any unplanned purchase, ask yourself: “Would I still want this at full price?” If the answer is no, it’s probably the discount talking, not your actual needs.

4. "I Don’t Know Where My Money Goes" – Avoidance Behaviour

Your brain loves comfort. That’s why it often prefers not to confront uncomfortable truths, like overspending or a lack of savings. This tendency to avoid financial reality can lead to missed bills, mounting debt, and increased stress.

Avoidance feels easier in the moment, but always costs more in the long run.

What to do instead: Track your expenses for just one week. You’ll likely spot patterns and surprises. Awareness alone is a powerful first step in breaking this habit.

5. "It’s Only $5" – The Latte Factor

Small expenses feel harmless. A coffee here, a takeaway lunch there. Individually, they don’t break the bank—but over time, they add up significantly. Our brains naturally discount small costs while overestimating big ones.

This is what financial expert David Bach calls the Latte Factor—the unnoticed daily splurges that quietly eat away at your financial progress.

What to do instead: You don’t need to eliminate small pleasures completely, but notice them. Set a weekly spending limit for minor purchases. It keeps enjoyment intact while maintaining control.

6. "Everyone Else Is Doing Better" – Comparison Thinking

Thanks to social media, it’s easy to feel like everyone else has their finances sorted. Fancy holidays, home renovations, and new cars can trick you into thinking you’re falling behind. This triggers emotional spending or financial decisions driven by envy or shame.

Your brain is seeking validation, not financial progress.

What to do instead: Unfollow or mute accounts that trigger comparison. Focus on your own progress, not someone else's highlight reel. Financial success isn’t a race—it’s a personal journey.

7. "I Can Handle It Later" – Underestimating Debt

Debt often starts with small choices: a credit card charge, a buy-now-pay-later deal, or an emergency expense. The problem is that our brains tend to minimise the future burden of debt. As long as payments are "manageable," it doesn’t feel urgent.

But interest compounds, and before you know it, what started as a convenience becomes a serious weight.

What to do instead: Face debt head-on. Create a realistic repayment plan and consider consolidating or refinancing if needed. And if you're feeling overwhelmed, don't wait—talk to a financial counsellor.

Help Paying Bills: When a Cash Advance Makes Sense

Despite our best efforts, life doesn't always follow the spreadsheet. A sudden bill or an unexpected cost can leave even the most budget-conscious feeling strained. In those moments, financial tools like a cash advance can provide short-term breathing room.

Apps like Wagetap offer early access to your earned wages, helping you bridge the gap without turning to high-interest loans or credit cards. It’s not a substitute for long-term savings or financial planning, but when used thoughtfully, a pay advance app can help you avoid late fees or overdraft charges.

So the next time your brain tries to convince you that everything’s fine (when it’s really not), remember: a little support, like being able to get your pay now, can go a long way in keeping your finances stable and your stress levels low.

Understanding how your brain trips you up is the first step in getting ahead of those mental money traps. And when you combine awareness with the right tools, you're not just playing defence—you’re finally playing smart.

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