Breaking bad … financial mindsets, that is

Person online shopping on a tablet and paying with a credit card.

You want to improve your personal spending habits, so with the best intentions, you turn to GoogleTM for help identifying and avoiding the worst behaviors when it comes to handling your money. Your search returns a page full of articles with identical advice: avoid impulse buying, track your spending, leave the credit card at home, save more.

Perfectly good guidance, but also a little elementary, right? What would be more helpful is to get to the root of those bad habits—to get inside your head and pinpoint the thoughts driving your behavior.

“A lot more goes into our money choices than cold, rational calculation. Our emotions can have a huge impact on the bottom line,” says Deborah Etchings, Assistant Vice President of Partner Engagement at BluPeak Credit Union, and host of our webinar Psychology of Spending. “By examining the feelings behind the decisions, you can begin the process of making the most productive choices possible.”

With that, let’s explore some of the biggest psychological pitfalls that people succumb to in the current moment—and more importantly, how to overcome them to start building better money habits.

1. Understanding needs versus wants
The basic way to tell the difference between needs and wants is that the former refers to anything you must have to stay alive, while the latter pertains to what you desire. But in our daily lives, few of us reason in such black and white terms.

When generic personal-finance articles advise you to delay an impulse buy for a day or a week, part of the reason for this “cooling off” period is to help you realize a deeper truth that will serve as a better rule of thumb for deciding where you spend your hard-earned cash. And that is: True needs rarely change over time, while wants are often fads or trends that ultimately fade.

As this article suggests, before making a purchase, ask yourself if that product or service will still serve its purpose two years from now, or will it only make you happy in the moment?

2. Resist the allure of online retail

Depending on how prevalent Covid is in your community, the pandemic may not be as big an influence as it was over the past few years on how you go about your day. But one change that is here to stay is the rise of shopping from our digital devices.

It’s perfectly reasonable to buy everyday essentials online to avoid getting in the car, burning fuel, scrambling for parking and scouring aisle after aisle for the brand of bread or diapers that may or may not be in stock. But one-tap purchasing can be downright devious if you’re a fashionista or sneaker aficionado.

There’s a reason we have the term “Regretsy,” which is essentially impulse buying on the e-commerce site that sells handmade and vintage items (and then realizing that you have no place in your home to hang that adorable $300 light fixture). Be stronger than that.

3. Avoid ‘revenge shopping’

Related to the extreme restrictions on everyday activities we were forced to comply with during COVID, now that many of us are getting out and about again, those who feel they lost out on life’s joys – and have the money to burn – are spending it with a vengeance.

Consumers are “spending exorbitant money on items and experiences that they felt they were deprived of last year,” Kristen Gall, president of the online-shopping and rewards company Rakuten, told The Los Angeles Times in an article about California’s reopening.

Yes, you should definitely reward yourself and your family for sheltering in place and taking all those precautions for the sake of public health. But just because you can book a trip to Europe again, should you? Has the tourism industry even fully recovered? Oh, and check out how climate change is affecting the weather across the pond these days.

Instead, how about treating yourself to a trip out to the coast. We do live in California, which has a string of world-class picnic spots from north to south.

4. Escape self-entitlement

Whether it’s all the day-to-day obligations around work and family, or the bubbles that social media put us in, it’s easy to lose sight of how the rest of the world lives. And the way the rest of the world lives is not like the average American. Peruse the travel entries of Americans visiting less affluent nations, and you’ll soon notice a pattern.

This isn’t about guilt, it’s just about being able to step outside of our own little world and compare our wants and needs to the wants and needs of those without many of the creature comforts that we’ve come to take for granted. And it’s as easy as remembering the dusty outskirts your plane flew over en route to the resort, or if your family originally immigrated to America, thinking about your relatives and what they have and don’t have.

This can be a powerful tool whenever you feel the urge to spend on “must have” items that people in poverty – including over 37 million Americans – would consider non-essential.

5. Don’t fear basic math

Personal finances can get complicated very quickly, starting with taxes and other paycheck deductions, loan payments, everyday expenses and occasional splurges. One way to restore simplicity and sanity is to make a single number the most important one in your mind: your “discretionary income.”

On, discretionary income is defined as “the amount of money remaining after you pay essential bills like your mortgage or rent, groceries, utilities and other necessary expenses.” You start with your after-tax income across all revenue streams, such as tips if you’re a server or side hustles like ride-share driving. Then, add up all your necessary expenses (mortgage or rent, groceries, utilities, etc.) and then subtract that total from your earnings to calculate your monthly discretionary income.

That should be the one amount that any additional expenses not already accounted for doesn’t exceed from month to month. And if possible, your goal should be to increase how much less you spend over time, and create a habit of saving for the future.



BluPeak Credit Union offers free resources to ensure your financial well-being, from our educational webinars to planning worksheets to set goals, develop a budget, and calculate your net worth. Please visit us at

This information and related links are being provided for informational purposes only and as a convenience. Links to external resources do not constitute an endorsement or an approval by BluPeak Credit Union. Must meet membership and account criteria.

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