How people make decisions about money

The behavioural science behind how customers make decisions about money must be at the heart of your brand and marketing strategy. Why?

Well, we may think that we are level-headed when it comes to finance, but are we?

Finance is More Emotional Than You Think

Money talks – but more than that, money matters.

The average financial service speaks to us through interest rates, bank accounts, and returns, as if a good statistic is all it takes for us to switch banks. At a baseline level, that information does its job – it lays out the choices on offer and the numbers needed to make a decision.

But financial decisions have never been that simple.

At the end of the day, it’s not just about investing our money, but we’re investing ourselves – our present and our future – and of course we’d like to think we’re rational about it, but that’s never quite true.

From Rationality to Reality

Facts and figures in isolation would be sufficient if we were purely rational beings, but it’s long been established that we’re not.

We operate under something called bounded rationality, whereby our decision-making is shaped by cognitive limits, time constraints, and incomplete information. It means that we don’t calculate the optimal choice; we just find the option that’s “good enough”, efficiently.

We also make decisions through two distinct mental pathways. Whether you call them heart and head, System 1 and System 2, or the automatic and reflective systems, both play a role in how we handle money.

For example, in time pressured situations, System 1 takes over. Just think impulsive purchases before you’ve even thought them through.

Then there’s System 2, which is slower and more deliberate, often associated with rational decisions. But rational doesn’t have to mean emotionless. And emotion doesn’t necessarily mean positive or negative – all emotions naturally guide decision-making. Even considered, System 2 financial choices – like mortgages and wills – are shaped by hopes, fears, and aspirations.

Financial brands often miss this. Or they know this about their customers but simply don’t utilise it. When they only talk and act functionally – in the language of features and rates – there’s a disconnect between their narrative and how people actually decide which brand and services fit into their lives.

Behavioural and Emotional Finance

The first step to making that change is through understanding two fields that explain it best.

• There’s behavioural finance, which is concerned with the biases behind financial decision-making. Where bounded rationality explains to us that human rationality has limits, behavioural finance allows us to see exactly how.
• Then there’s emotional finance, which goes a layer deeper. It focuses on unconscious feelings and fears – that we often can’t fully articulate – which further influence and drive our behaviours.

Together, they help shed light on the fact that some financial decisions are more complex than they may first seem.

Let’s revisit the idea of impulsive purchases, or developing on that, an unplanned shopping spree.

Some may interpret a situation like this as carelessness with money. In reality, it could be a form of affect regulation, or mood repair, to change how you’re feeling if in a state of stress or anxiousness. It could also be a way of hijacking the dopamine loop, where those purchases are interpreted as a form of reward, giving you a buzz each time you buy. Even if the behaviour isn’t rationally feasible to repeat, the emotional regulation it seems to provide can be enough to maintain it.

Or take a scenario like under-saving for retirement.

When considering biases like present bias, where people are focused on the benefits money could get them in the present, and optimism bias, where people assume that future-you will simply handle it, it’s easy to understand why it is so widely deprioritised. Here, the issue isn’t misunderstanding statistics or lacking the knowledge, but rather the emotional reward of saving being less visible today.

Why Does This Matter for Brands?

Understanding consumers through behavioural and emotional finance isn’t just an excuse to use psychological buzzwords – it creates real insights to ensure a brand is built on the strongest foundations, and can express itself in a way that truly connects with its audience.

When it comes to financial services brands, where there are many similarities in offerings, these are the things that can differentiate them to consumers. Take the fact that some people engage in the avoidance behaviour of not checking their financial account when stressed or anxious. Noticing this and responding with reassurance and motivation, rather than a generic balance alert, could be a way to act on insight, rather than just talking about it.

In messaging, that could mean leading away from communications solely consisting of rational figures and clinical language. Rather, campaigns and content are the opportunity to use relatable scenarios, acknowledge the emotional weight of financial decisions, and lead with language that makes these tasks feel manageable rather than overwhelming. By recognising the reality of the process – the difficulty, the uneasiness – people are provided with the reassurance they are consciously or subconsciously looking for. Often, this can be more persuasive than a competitive rate alone.

In user experience and journey design, the same principle should carry its way through. After all, acknowledging the difficulty of a decision in words means little if the experience itself isn’t aligned. This could translate into high-stakes decisions being met with reassurance and friction to ensure individuals are making the right decision for them, with simple, everyday tasks instead met with ease and efficiency. It’s not about simply nudging people at their most vulnerable, but about building a pace and environment that suits their needs.

Money might make the world go round, but humans are at the core of that – and that’s worth brands designing properly for.