You tell yourself this month will be different; you’ll save, budget, think long-term. And then payday hits – and somehow, so does the urge to swipe. If living paycheque to paycheque feels like a cycle you can’t break, the problem might not just be maths. It might be your brain.
From dopamine-driven spending highs to the anxiety-fuelled tunnel vision of a scarcity mindset, clinical psychologist Nina Striglia explains the powerful psychological forces shaping your financial habits – and how to start rewiring them.
Meet the expert: Nina Striglia is a clinical psychologist based in East London.
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The Psychology Of Living Paycheque To Paycheque
The Neurophysiology of Spending: Why Your Brain Craves the ‘Dopamine High’
In today’s economy, living paycheque to paycheque is the reality for many South Africans given the high cost of living. But there is definitely a psychological basis to this pattern. Financially, many people don’t inherently view their income as something safeguarding their future. But rather, they view it as a means to meet current needs (survival, if you will).
The narrative we have surrounding our spending habits is important too – we want to see the materialisation of our daily work efforts in instant, tangible evidence – which encourages spending with something to show for it. On the other hand, investing and saving does not yield as many pleasurable, real-time rewards.
Why Does Spending Money Feel So Good?
Well, this tendency is rooted in neurophysiology, more particularly, the mesolimbic system.
- Purchases trigger a dopamine surge in the brain, activating the brain’s reward system, in the same way consuming food or addictive substances would.
- Dopamine pathways drive the anticipation, motivation and pleasure behind spending money, and the dopamine high becomes a sought after experience.
- This can create a very problematic cycle because once funds are depleted, so are the opportunities to achieve a dopamine high through expenditure – which results in frustration, feelings of helplessness and low-self esteem.
- This only makes us crave more dopamine to regulate our systems, resulting in further overspending and a reduced capacity to break out of this cycle and achieve financial freedom.
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The Scarcity Mindset: How ‘Tunnel Vision’ Blocks Financial Progress
Living paycheque to paycheque is also often rooted in a cognitive framework called the scarcity mindset. The scarcity mindset is a worldview, or lens, underpinned by anxiety and fear, where individuals fixate on perceived shortages of money, time, love etc. This cognitive bias causes people to focus on what they lack, reinforcing feelings of never having enough, which spirals into thoughts of never being enough.
This often results in stress, hoarding behaviour and competition, even when their needs are being sufficiently met. Anxiety occurs as a result of this belief that resources are limited, even when they aren’t – resulting in “tunnel vision,” where the brain can only focus on immediate, urgent needs; making long-term financial planning and execution difficult.
Individuals become “stuck” in this dysfunctional cognitive mindset, ultimately creating a self-fulfilling prophecy that leads to poor financial decision making and other behaviours that perpetuate the feeling of lacking, reinforcing the “stuck” feeling.
Learned Helplessness: Breaking The Cycle Of Financial Shame
Feeling out of control and powerless regarding our spending habits creates a deep sense of shame and underachievement. This reduces help-seeking behaviour and a learned helplessness can take over, reducing our capacity to instil a sense of agency over our situations.
Learned helplessness, first identified by Martin Seligman during the 1960s, is a psychological state whereby individuals believe that escaping negative or uncomfortable situations is not possible. This leads to decreased motivation and an increased risk for developing depression.
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Building Your Psychological Scaffolding: Reflecting On Money Origins
An approach to addressing these issues would be to explore and reflect on the origins of the behaviour, and secondly, what emotions and thoughts perpetuate or maintain the behaviour.
For many people, there is a clear history of formative adverse socioeconomic experiences that have occurred since childhood – like growing up in a single-parent household or needing to provide financially for your extended family from young.
For others, there may have been more subtle influences that become engrained in our relationship with money – like the language used to discuss finances, job loss or financial exclusion.
These experiences form the psychological scaffolding of the individual cognitive structures that underpin our behaviours with money.
Negative appraisals and thinking patterns become embedded, but they can be explored through psychotherapy approaches like Cognitive Behavioural Therapy (CBT). The below questions can be used as prompts but note addressing your thoughts and behaviours around money is a highly personalised and unique process, and psychotherapy can help with this.
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Financial Self-Reflection Exercise
Part 1: The Psychological Scaffolding
These questions explore the origins of your behaviour and early socioeconomic experiences.
- What were your caregivers’ experiences and relationship with money?
- Were you exposed to early financial hardship or parents’ financial stressors?
- How were your needs met?
- Did you feel burdensome, or pressured to become financially independent?
- How do these early experiences influence your interactions surrounding finances today?
Part 2: Current Emotional Drivers
These questions help identify the “real-time” thoughts and feelings that maintain current patterns.
- When you receive your salary, what is your first emotion and thought?
- How do you feel when you discover someone earns more than you?
- What emotions do you feel when you save, spend, or invest?
- Have you ever felt deprived of basic needs? Do you fear this happening again?
Part 3: Identifying The Core Driver
Once you have reflected on the questions above, look for patterns to determine your intervention path.
| If the core driver is Fear or Anxiety | If the core driver is Impulsivity |
| Focus on: Nervous system recalibration and cognitive restructuring. | Focus on: Distress tolerance and structured logistical interventions. |
| Goal: Reducing anxious responses to perceived scarcity. | Goal: Limiting fund access and setting up automatic savings. |
