The Psychology of Treating Yourself Wisely

The Psychology of Saving

In a perfect world, we set a practical budget, spend only on essentials, and make steady progress towards inspiring savings goals.

But in the real world, life happens. Sticking to a rigid plan isn’t always possible—or desirable.

For instance, consider this: despite the cost of living pressures, Australians spent over $60 billion on food services and catering in the last year, highlighting a deep-seated value for social connection and experience. Simply dining at a restaurant with friends can be essential to our well-being, fostering connection and giving us something to look forward to.

Similarly, purchasing something you genuinely want—a great way to treat yourself—can significantly boost your happiness.

This isn’t about frivolity; it’s about choosing things that improve your life, whether through usefulness or pure enjoyment.

The Counterintuitive Truth About Restriction

Of course, you could reach your savings goals faster by cutting all “extras.” But all work and no play is not only unsustainable—it may actually sabotage your long-term financial success.

This is backed by behavioural science: the more deprived we feel, the more likely we are to abandon a restrictive plan entirely.

When you have a sense that you are living in a state of abundance, the opposite occurs. You feel in control and motivated.

The trick is to redefine what abundance means for you. Is it savouring a perfect barista-made coffee that adds genuine pleasure to your day?

True financial abundance isn’t about having limitless money; it’s about having your money organised so that you can afford life’s necessities and your well-considered pleasures without guilt.

Crafting a Budget That Feels Abundant

So, how do you build this sense of abundance?

It starts with a realistic, compassionate budget.

Limiting yourself too much with an impractical budget, only to feel disappointed when you can’t stick to it, is a demoralising cycle. A more effective approach is to be intentionally generous with your expendable income.

1. Automate your essentials: First, automate your bill payments and savings contributions. This ensures your financial foundations are solid.
2. Budget for joy: Then, allocate a specific, comfortable amount for “fun” or “personal spending.” This is your guilt-free zone for coffee, dinners, or hobbies.
3. Prioritise sustainability: Saving a slightly smaller amount consistently over the long term is far better than setting an unrealistic goal and constantly failing. Sustainability is key.

As noted by the Australian Securities and Investments Commission’s Moneysmart guide, a successful budget is one you can live with. It’s about balancing your future needs with your present well-being.

Align Your Savings with Your Values

The ultimate motivation comes from aligning your budget with what truly matters to you. Understanding why you are saving—and ensuring your spending money is directed toward genuine happiness—is a powerful strategy.

Ask yourself:

• What’s most important to me?
• When do I feel the most fulfilled?

Your answers should directly inform your savings goals. For example:

• Love to travel? Then your savings goal is a specific travel fund.
• Love to learn? Investing in a course or workshop is a worthwhile goal.
• Adore entertaining? Saving for a home renovation that creates a better space for gatherings makes perfect sense.
• Value family time? A goal might be building a buffer that allows you to reduce your work hours.

When your financial goals are a direct reflection of your core values, staying motivated becomes effortless. You’re not just restricting spending; you’re actively funding the life you want to live.

What does abundance mean to you?

Revisit your budget this week with this question in mind.

You might find that a small shift in perspective is all it takes to make your financial plan a lasting success.