Financial literacy can give people the tools to understand how money can be managed, saved, and invested. However, knowing what to do financially does not always explain why people behave differently in practice. Kelli Gabriel, CEO and founder of Stewardship Private Wealth Management, believes financial decisions are influenced not only by knowledge, but also by emotional states, learned behaviors, reward systems, and nervous system responses that can shape decisions in the moment.
Gabriel’s understanding of these influences has developed over more than 25 years in financial services, including extensive experience helping clients navigate complicated financial circumstances. A personal financial crisis eventually gave that professional experience a more personal dimension. A painful relationship breakdown, influenced by another person’s fears about financial security, allowed Gabriel to recognize how deeply established beliefs about money can affect significant decisions. The experience also led her to consider a broader question. She says, “Instead of asking, ‘Why would someone make that decision?’ financial behavior may become more understandable by asking, ‘What did that decision do for them in that moment?’”
That question redirects attention toward what a financial decision may be accomplishing emotionally in the immediate moment. A purchase can create a sense of pleasure, an investment can generate excitement, checking an account can bring reassurance, and putting off a bill can provide temporary relief from discomfort. Financial literacy may provide the logical response to a financial question, but an emotional need can influence the motivation to act. “The interesting question is why knowing often isn’t enough,” Gabriel says.
Research offers support for taking a closer look at this disconnect. A meta-analysis examining 201 previous studies found that financial literacy interventions accounted for a relatively small portion of the variation in observed financial behaviors. The impact of financial education also tended to decrease over time. These findings indicate that education may have greater practical value when it is directly connected to particular behaviors and financial decisions.
The environment and circumstances surrounding a decision can introduce another important factor. Financial choices can take place during periods of anxiety, excitement, loneliness, fear, boredom, or hope. Childhood experiences, family beliefs about money, and experiences of scarcity can also contribute to financial habits that remain in place over time. Gabriel shares, “I’ve noticed that clients who come from families that lived through serious financial hardship often develop very cautious money habits, while some clients who grew up with plenty of resources still struggle to feel comfortable spending, even when they’re financially secure.” These experiences demonstrate how financial behavior can reflect an individual’s personal history just as much as their current financial position.
The nervous system may also influence financial behavior. Research examining financial stress has connected chronic financial stress with reduced inhibitory control and differences in real-world economic decision-making. Other experimental research has shown that acute stress can affect risk-taking and increase dependence on more automatic responses. Financial pressure can therefore involve more than the resources available to a person. The psychological state in which a financial decision is made can also influence the resulting behavior.
Gabriel has encountered repeated examples of this pattern through her work with clients. One financially successful client became overwhelmed during a market downturn despite having extensive investment knowledge. In another example, financially comfortable individuals had accumulated substantial resources but struggled to feel comfortable using those resources to enhance their everyday lives. Gabriel sees these behaviors as learned responses that can potentially be identified, changed, and redirected.
The pursuit of immediate reward also helps explain how seemingly minor financial decisions can build into larger patterns. “Buying an item simply because it is discounted, changing a vehicle, chasing an investment return, checking an account repeatedly, postponing a bill, or spending to relieve an emotional void can each provide a short-term psychological payoff,” Gabriel emphasizes. Dopamine plays a role in the brain’s reward system, which can make anticipated rewards particularly attractive. One decision may seem relatively unimportant, but repeating similar decisions hundreds or thousands of times can ultimately create a very different financial path.
This becomes increasingly significant as people live longer. Longer and healthier retirements can require enough financial resources to support multiple decades of life beyond traditional retirement age. Research on consumption and well-being also indicates that additional material consumption can result in diminishing increases in life satisfaction. Experiential, relational, and intrinsically meaningful forms of spending have shown stronger connections with well-being in the literature reviewed. For financial planning, the implication extends beyond simply accumulating wealth. Money can also provide security, freedom, relationships, experiences, and the ability to make meaningful choices.
Gabriel identifies metacognition as one practical method for creating space between an impulse and a financial decision. “A simple pause can invite questions such as, ‘Why am I doing this right now?’ or ‘What am I actually trying to feel?’ That moment of reflection can help identify whether a financial action is serving a genuine need, a learned pattern, or a search for immediate relief,” she remarks.
From this perspective, financial success is not about removing emotion from financial decision-making. Instead, it involves developing greater awareness of the emotions and learned patterns that can shape financial behavior. As Gabriel puts it, “The way we handle money is learned behavior. And because it is learned, it can be unlearned.” Greater awareness can provide an opportunity to interrupt automatic reactions and make financial choices that support both present well-being and long-term security.
Ultimately, financial planning is about more than simply accumulating greater wealth. It is about using resources to create security, freedom, meaningful experiences, and opportunities to support others. Financial well-being therefore becomes less about trying to control every financial decision and more about understanding the patterns that influence those decisions, then consciously determining which of those patterns continue to serve us.
