New series Britain’s Spending Secrets sees Anne Robinson meet people from across the wealth spectrum – from wealthy frugalists to broke single parents who are running up debt in pursuit of a celebrity lifestyle.

But where do our spending habits come from? We’ve been looking into the psychology of spending to try and find out.

Parental influence

While some people may be natural risk takers or thrill seekers, there’s good evidence that financial habits are rather more nurture than nature. A study by behaviour experts at Cambridge University, carried out for the Money Advice Service, suggests that the spending habits learned by young children will affect the financial decisions they make for the rest of their lives.

In fact, the academics claimed that money habits are formed by the age of seven, prompting the Money Advice Service to urge parents not to underestimate the effect their own good and bad money habits will have on their children.

Dr David Whitebread of Cambridge University explained: “The 'habits of mind' which influence the ways children approach complex problems and decisions, including financial ones, are largely determined in the first few years of life. Simply imparting information is now recognised as being ineffective in this area.

“By contrast, early experiences provided by parents, caregivers and teachers which support children in learning how to plan ahead, in being reflective in their thinking and in being able to regulate their emotions can make a huge difference in promoting beneficial financial behaviour.”

In short, it’s not about what your parents tell you to do; it’s about what they show you that they do themselves.

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So are we incapable of change?

However, it would be very wrong to suggest that some people are simply incapable of being more careful with money because of their upbringing. The internet is full of blogs and stories about debtors who hit rock bottom before rebuilding their lives and changing their spending habits.

And, not to go all self-help book on you, but there are some well-documented processes to swapping bad habits for more positive behaviour.

Charles Duhigg, the author of The Power of Habit: Why We Do What We Do and How to Change, says it is essential to recognise which of our decisions are really habit. He suggests if you’re worried about your spending you should first identify when you are spending money.

Is it on weekdays or weekends? Mornings or afternoons?

Is it lots of small purchases or a few large ones? Does it happen when you are alone or with friends?

According to him, it’s important to identify the cue for your overspending, which he suggests could be anything from boredom to routine. Some people crave the shopping experience, others crave new possessions.

By working out what prompts you to spend money you don’t need to, you can form a plan to distract yourself from that spending.

For example, if you typically shop online on a Friday night then try banning the laptop or tablet from the room.

And try to avoid the need to keep up with the Joneses next door.

[Related story: Generational spending gap as over-50s spend more on holidays]

Marketing and manipulating

Of course, some of our behaviour is undeniably manipulated. Marketers know how to encourage us to spend, how to work out natural impulses to boost our willingness to part with our cash.

Here are just a few of the ways they do it.


Nostalgia is a common tactic for marketers because it makes us willing to spend lots of money. Research from the University of Southampton, the University of Minnesota and Grenoble Ecole de Management showed that people who were thinking about the past were more likely to spend more money than participants thinking about more recent memories or future events.

“Feeling nostalgic weakens a person's desire for money,” the report concluded. “In other words, someone might be more likely to buy something when they are feeling nostalgic.”


Christmas, Valentine’s Day, birthdays and recently Black Friday have all become major marketing staples, which use ritual to encourage people to buy.

Consumer psychology expert Gary Pheiffer from London Metropolitan University’s School of Psychology told ITV News: “Having such a ritual increases the spending of consumers. It is an artificial stimulus created by marketers that 'allows' or encourages spending that is seen as rather sensible - not impulsive.”

In short, your spending seems planned and therefore more sensible than simply going out and blowing a lot of money randomly.

Limited availability

You know how Apple seems to always sell out of its newly launched product on the first day? You’d think a giant of commerce such as that would want to sell as many units as possible in one day and so would have a warehouse full of them.

However, some analysts have argued that retailers who limit availability of their new items boost demand in the long run. It evokes desire in consumers by making the product appear difficult to obtain and highly in demand.

The result? People end up queuing overnight to snap one up instead of waiting five days for the next shipment.

See if you can spend less on your gas and electricity bills

Image: Dominic Lipinski/PA Wire