For some, spending money is as natural as breathing. But if you suffer from “chrematophobia” – the fear of spending money – doing so might bring on feelings of nausea, anxiety, or even panic.
While chrematophobia is rare, it highlights a widespread concern among many UK adults – knowing when it’s okay to spend money within a financial plan that might seem to prioritise long-term goals over short-term needs.
The key takeaway: spending is a necessary component of your financial plan.
Keep reading to find out why.
Spending money has been linked to higher levels of happiness and self-esteem
When times get tough (such as during the ongoing cost of living crisis), many people can be discouraged from spending money.
In fact, the Guardian reported in December 2025 that, while 56% of people feel secure about their personal finances, most are still reluctant to spend going into 2026, largely due to a worsening economy pulling purse strings tighter.
To be cautious is to be sensible. But if you cut out spending entirely, you could be missing out on key psychological benefits.
Studies have shown that self-gifting has been linked to higher levels of self-esteem and has a positive impact on your general wellbeing, according to Psychology Today.
Research from the University of Cambridge also found that “spending can increase our happiness when [money] is spent on goods and services that fit our personalities and so meet our psychological needs”.
For example, the BBC reports that individuals are much happier when buying experiences rather than products. A National Library of Medicine study also found that spending money on others compared to yourself can promote even greater levels of happiness.
It’s important that you also apply this understanding to your financial plan.
While short-term goals, like saving for a holiday or buying a car, might feel inconsequential compared to your long-term retirement plans, they are important to help support your present wellbeing.
You can use financial planning to achieve these short-term goals and build your spending confidence.
4 ways financial planning can help you develop healthy spending habits
1. Create a budget
A budget helps you organise your finances on a month-by-month or week-by-week basis, taking into account your:
- Income from your salary, dividends, and property
- Essential outgoings like rent, utilities, and groceries
- Savings and investments like pensions and ISAs.
Alongside building wealth towards your long-term goals, a budget can also factor in your short-term needs, such as a regular spending allowance.
Knowing how much you can spend each week or month without jeopardising your long-term goals can improve your spending confidence and develop into a healthy habit if practised regularly.
2. Build up an emergency fund
Setting up an emergency fund can give you more spending confidence knowing that you have a cash safety net to fall back on.
An emergency fund is usually easy-access cash holdings made up of three to six months’ worth of essential living costs.
While an emergency fund is typically reserved for high, unexpected costs, like a broken boiler, it can also act as a psychological safety net, improving your spending confidence.
3. Use cashflow modelling
If worries about “what-if” scenarios are preventing you from spending, then a financial planner can use cashflow modelling to help mitigate your anxieties.
Cashflow modelling can project your income and expenditure to see how they might change over time. Financial planners can then apply different economic or personal circumstances to these models to see how they might affect your wealth.
For example, if you’re concerned about spending your money due to fears you’ll not have “enough” in retirement, cashflow modelling can be used to predict how much you might have. You can then see the difference a rise in contributions or a drop in personal spending might make.
Doing so can help you fill any potential gaps in your financial plan and help you find peace of mind to spend in the present.
4. Offer reassurance
Alongside financial expertise, the value of a financial adviser often lies in our ability to help provide calm reassurance for you and your wealth.
If you worry about your spending, you can set up a meeting with your financial planner to discuss any concerns you have.
More often than not, a simple conversation can help you find your spending confidence by putting your mind at ease.
If you’re concerned about spending, get in touch with your Engage Wealth Management financial planner and set up a meeting today.
Email us at [email protected], or call 01273 076 587.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate cashflow planning.
