Derek Hagen, CFA, CFP®, FBS®, CFT™

“We have a natural tendency to compare ourselves to others, but this often leads to unhappiness.”

-Daniel Gilbert

Clients don’t just spend money. They anticipate it, experience it, and remember it.

Why Advisors Should Care About the Psychology of Spending

Clients rarely make spending decisions based on pure logic. Even those who describe themselves as analytical or numbers-driven still react to emotions, expectations, comparisons, and memories.

Most advisors already know that money itself doesn’t create well-being. But how clients use their money and how they experience that use often determines the real payoff.

And that payoff is shaped by three stages of every purchase:

Anticipation
Experience
Memory

These stages follow a predictable psychological pattern that advisors can help clients understand and use to their advantage.

Sketch: Sketch of how anticipation leads to experience, which becomes memory. Shows the full Anticipation-Experience-Memory journey.

What Anticipatory Utility Is and Why It Matters

The first stage of spending is before the spending happens. Anticipation is the mental runway leading up to a purchase or experience. Clients imagine how good (or bad) something will feel.

Sketch: Person anticipating a positive future experience. Highlights emotional value before the moment happens.

Anticipation can boost well-being by creating excitement, optimism, and a sense of future reward. In behavioral economics, this is known as anticipatory utility: the value we get simply from looking forward to something.

Clients often underestimate how powerful this phase is. Sometimes they even lose it entirely; think of a surprise trip where the “gift” unintentionally removes the weeks of looking forward to the trip.

Awareness of anticipatory utility helps advisors reframe spending conversations. Clients aren’t just buying an event. They’re also buying the pleasure of anticipating it.

Sketch: Excitement fuels anticipatory utility—feeling good now by looking forward to something later.

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How Clients Experience a Purchase in the Moment

Most people assume the experience is the main driver of satisfaction. It matters, but not always in the way clients think.

Sketch: A happy moment labeled ‘Experience.’ Shows the core event between anticipation and memory.

One helpful concept from positive psychology is savoring, the practice of slowing down to stay present with an experience as it’s happening. Clients who savor tend to extract more meaning and joy from the same dollar spent.

Sketch: Savoring enhances the experience while it’s happening. Focuses attention on the present.

Then there’s the peak-end rule, a finding from psychological research showing that people remember experiences almost entirely based on two moments:

The emotional high or low
The ending

This is where spending decisions get interesting. Because of the peak-end rule:

A vacation that ends on a positive note gets a permanent upgrade in memory.
A trip ruined by the stressful travel day home may feel worse in hindsight than it actually was.
Small intentional “endings” like a final dinner, a closing ritual, or a meaningful last moment can shape how clients store the experience.

Advisors can help clients design experiences with endings in mind.

Sketch: The peak-end rule: we remember experiences by their emotional high point and how they ended.

Why Clients Remember Purchases Differently Than They Lived Them

This final phase lasts the longest. Daniel Kahneman’s research distinguishes between:

The experiencing self (who lives the moment), and
The remembering self (who tells the story afterwards)

The remembering self is the one clients reference when deciding whether something was “worth it.”

Sketch: A person remembers a past experience. Highlights how moments are stored and recalled later.

And memory has its own quirk: euphoric recall.

Euphoric recall means clients tend to forget hassles, minimize frustrations, and remember the good parts with extra positivity. It’s why someone says, “Everything went wrong on that trip… but honestly, it was great.”

These psychological dynamics determine how clients evaluate purchases more than the spreadsheet ever will.

Sketch: Euphoric recall: remembering the good parts of an experience more strongly than the full reality.

How Advisors Can Help Clients Design More Meaningful Money Experiences

Clients don’t just spend money. They anticipate, experience, and remember how they spend it. Each stage adds (or subtracts) from overall life satisfaction.

As an advisor, you can help clients:

Be intentional about anticipatory joy
Savor experiences instead of rushing through them
Plan endings that leave a positive imprint
Create memories worth revisiting
Evaluate spending through meaning, not perfection

When advisors incorporate these insights into financial life planning, spending becomes more than a transaction. It becomes a tool for shaping a meaningful life.

Financial planning isn’t only about security or optimization. It’s also about crafting a life that clients feel good remembering. Understanding the psychology of anticipation, experience, and memory helps advisors guide clients toward decisions that deliver emotional returns long after the money leaves their account.

By tuning into the human side of spending, advisors can help clients turn ordinary purchases into enduring sources of satisfaction.

FAQ: The Psychology of Spending

What is the psychology of spending?

The psychology of spending describes how clients anticipate, experience, and remember purchases. These emotional stages shape satisfaction more than the cost itself.

What is anticipatory utility?

Anticipatory utility is the emotional value clients gain before a purchase. Looking forward to something often creates more well-being than the experience itself.

How do clients experience spending in the moment?

Clients experience spending through presence, emotion, and attention. Practices like savoring help them extract more meaning and joy from the same dollar spent.

Why do memories shape spending decisions?

Memory drives whether clients feel something was “worth it.” Factors like the peak-end rule and euphoric recall influence how purchases are remembered.

How can advisors help clients design better spending experiences?

Advisors can encourage clients to plan for anticipation, savor key moments, design positive endings, and evaluate spending based on meaning rather than perfection.

Want to Learn More?

Money Quotient trains financial professionals in the True Wealth process and helps them implement the concepts into their practices. The first step is to learn about the Fundamentals of True Wealth Planning.