How to change the way you think about money: The psychology behind spending
“Doing well with money has a little to do with how smart you are and a lot to do with how you behave.” — Morgan Housel, author of The Psychology of Money.
Spending and saving aren’t just financial decisions, they’re emotional ones. The way we think about money can either push us towards stability and growth or leave us feeling anxious, frustrated, and unsure about the future. That’s where financial wellness comes in.
New Leaf Home Loans help people and families build strong foundations, not just by crunching numbers, but by understanding the ‘why’ behind their financial habits. We don’t just focus on savings — we look at the strategy, structure, and service behind every decision.
This blog will help you understand how your mindset influences your financial life and how changing your perspective on money can lead to more informed budgeting, better decision-making, and long-term financial success.
What is financial wellness?
Financial wellness is more than having money in the bank. It’s a sense of stability, confidence, and control over your financial life. It means being able to meet your current financial obligations, like paying bills on time and managing debt, while still living within your means. It also involves planning for the future by saving for emergencies, investing in long-term goals, and preparing for retirement.
Someone who is financially well understands their financial options and makes informed, thoughtful decisions. They’re not overwhelmed by money. Instead, they feel capable and calm when managing it. At its core, financial wellness is about having a healthy relationship with money — one that supports both your current lifestyle and plans.
Why is financial wellness important?
Less stress — Financial stress can significantly impact your mental and physical well-being. Gaining control over your money helps reduce anxiety and improve day-to-day well-being.
Better confidence — When your finances are in order, you make decisions from a place of security, not fear.
More freedom — Whether you want to travel, buy a home, or retire early, financial wellness gives you the freedom to pursue your goals without panic.
How your mindset can affect your financial wellness
Money isn’t just about numbers. It’s also deeply emotional. Our beliefs about money, whether conscious or not, are shaped by our childhood experiences, culture, media, and past financial successes or failures.
If you grew up hearing things like “we can’t afford that” or saw your parents stressed about bills, you might carry a scarcity mindset. If you were taught that money comes easily or that wealth equals success, you might feel more confident — or overconfident — about spending. Parents play a crucial role in shaping their children’s relationship with money.
But this is our chance to break negative cycles. Think about what you wish your parents had taught you and make that your starting point. Instilling the right lessons early on can set the next generation up for a lifetime of financial success.
The good news? Once you recognise your patterns, you can change them. Your mindset doesn’t have to define your financial future. Awareness is the first step towards financial independence.
Common money mindsets that influence your financial wellness
The scarcity mindset — This mindset believes there’s never enough. People with a scarcity mindset often feel anxious about money, even if they’re financially secure. They might avoid investing, hoard their savings, or hesitate to make big decisions due to fear.
The fix: Shift to an abundance mindset. Focus on opportunities, not losses. Learn how to make your money work through smart investing, retirement strategies, and long-term planning.
The ‘live for today’ mentality — Also known as the ‘YOLO’ mindset, this one prioritises immediate gratification. It’s all about enjoying life now with travel, eating out and online shopping. However, if you're not careful, you may find yourself struggling with debt and limited savings.
The fix: Enjoy life but balance it. Budget for fun but also set aside money for savings and goals. Think of it as future-proofing your lifestyle.
The risk-averse mindset — Being cautious is wise, but avoiding all financial risk can hold you back. This mindset may lead to avoiding investment, delaying decisions, or keeping money in low-interest accounts.
The fix: Educate yourself about risk. Diversifying your investments and seeking professional advice can help you take safe and informed steps towards building wealth.
The victim mindset — This mindset blames financial problems on external factors, such as the economy, upbringing, or bad luck. While these factors are real, staying in this mindset keeps you stuck.
The fix: Take ownership. You can’t control everything, but you can control how you respond and what you do next.
The entitled mindset — This mindset believes wealth is deserved without effort. It can lead to overspending, poor planning, and a lack of appreciation for long-term financial health.
The fix: Replace entitlement with responsibility. Recognise that real financial security comes from effort, patience, and planning.
The wealth-building mindset — This is the mindset we aim for. It’s proactive, informed, and intentional. People with this mindset learn about money, make strategic decisions, and view financial planning as a long-term journey.
How to create a positive money mindset
Self-awareness — Take note of your spending habits and how you feel when making financial decisions. Are you impulsive, anxious, or overly cautious? Awareness is step one.
Education — The more you know, the more confident you’ll feel. Whether it’s budgeting, superannuation, or investing, learning the basics helps you make smarter choices.
Goal setting — Set short, medium, and long-term goals. Having something to work towards gives your financial plan direction and purpose.
Mindfulness — Be intentional with spending. Ask yourself: Do I really need this? Is it aligned with my goals?
Resilience — Setbacks happen. Don’t let one mistake throw you off track. Stay committed and adjust your plan as needed.
Our top 5 tips on strengthening your financial wellness
Set clear financial goals — Know where you’re heading. Whether it’s buying a home, travelling, or early retirement, clarity helps you stay focused.
Start budgeting — Track your income and expenses. Prioritise essentials and make room for fun — just not at the cost of your future.
Save first — Put aside savings before spending. Even small amounts add up over time.
Avoid lifestyle inflation — Don’t automatically upgrade your lifestyle as your income increases. Save or invest the extra instead.
Invest wisely — Investing doesn’t have to be scary. With good advice and smart strategies, your money can work harder than you do.
New Leaf Home Loans is here to help you connect the dots between mindset, budgeting, and long-term success. We take the time to understand where you’re coming from, what’s holding you back, and how we can help you move forward.
If you’re ready to build a healthier relationship with money and create a financial plan that actually works for you, get in touch. Let's work together to shape a future you’ll feel good about.
