Metacognition in Personal Finance

Great food on our anniversary camping trip: Proof that metacognition works. 

DH = Dear Husband

“I find that I loosen up my spending when things are going well financially,” wrote Amy from Debtgal  in response to a recent post here at Fruclassity. “For example, if my husband gets a bonus check and I’m having a good month for sales from my Amazon store, my mindset shifts, and I feel less urgency to save.”


Amy was engaged in metacognition when she wrote that comment. A simple definition of the word metacognition is “thinking about thinking.” says that it means “higher-order thinking that enables understanding, analysis, and control of one’s cognitive processes (thought processes), especially when engaged in learning.”

Spending triggers

I know that for all of those years when I maintained and deepened our levels of debt, I wasn’t using metacognition at all. I definitely did as Amy did. When times were extra good financially, I felt a giddy compulsion to spend that extra. I also spent more when things were extra busy. And I spent more when I felt extra anxious about something. I spent more in accordance with bursts of extra love too – especially when it came to one of our children – and at times of celebration.

Different people are prone to different triggers to spend – and marketers are excellent at tapping into each one them – but the good news is that with a little metacognition, we can all train ourselves to have new responses to these triggers.

Metacognition applied to spending triggers

Let’s take a look at the last trigger that I mentioned for myself: times of celebration. Before we started our journey out of debt, DH and I used to celebrate our anniversary “with style.” In the lean years, when he was struggling to find a new career path after the high tech bust of the early millennium, anniversary splurging for us meant going out to a nice restaurant. But in the good years? An overnight stay at a resort – complete with dinner, brunch, and his & her back massages.

Our first couple of debt-reduction anniversaries saw a return to the restaurant meal – a step in the right direction. Our income was much higher than it had been in those lean years, with DH’s home business going strong, yet we were celebrating in the more frugal way that we had when things were tight.  Last year, DH wanted to go back to the resort. “We need to get away,” he said. We haven’t had a vacation all summer.

My metacognition kicked in. This was a triple trigger for me:

  1. It was a time for celebration.
  2. I felt one of those spendy “bursts of love” for my husband. He’d worked so hard on his business, and he needed a break.
  3. (This is a trigger I didn’t mention earlier.) DH was always more likely to say, “No, let’s not waste our money,” than I was. So whenever he wanted to spend, I encouraged it. And here he was, wanting to splurge for our anniversary.

Instead of giving in to my preconditioned responses to celebrate, love, and ride the wave of my husband’s rare desire to go all out, I expressed my doubt and encouraged more thought. I used to be the impatient one, eager for snap decisions. Yet here I was saying, “Let’s think about this some more.” And we did. And we got the best of all worlds. A get-away anniversary celebration, but not at a resort. We went camping for the weekend. A tent, a canoe, ice packs in a cooler . . . And in that cooler, along with some typical camping food, was a fillet mignon, a salmon steak, and a bottle of sparkling wine – all ready to say, “Happy anniversary!” It came in at a fraction of the cost of our resort get-away. And it was better.

Self-understanding, not self-judgment

Many of us, in our pursuit of debt-freedom or other goals, feel a real self-loathing when we fall off the wagon. The emotional ups and downs in a battle based solely on will power end up taking some people out of the game completely. Although it is essential to recognize our weaknesses, it is equally essential not to self-judge. Look at that definition of metacognition again. It “enables understanding, analysis, and control” of our thought processes. We don’t need to beat ourselves up in order to effect change. We need to change the way we think.

  • Understanding: It’s a change that starts as soon as we’re aware of what our thought processes are. (I spend more when it’s a time of celebration.)
  • Analysis: Once we have that awareness, we can pause and think instead of reacting unconsciously. (It’s our anniversary, and DH wants to splurge on a resort and have a well-deserved break. But isn’t there something else we can do? That resort is nice, but so expensive.)  
  • Control: Once we stop the reaction, we can choose a new response. (Let’s go camping!) 

It’s our anniversary again this week-end. Guess what we’re planning.

Amy from Debtgal has experienced the same phenomenon of metacognition and conscious change. I only quoted a part of her comment at the beginning of this post. Here it is from beginning to end: “Along the same lines, I find that I loosen up my spending when things are going well financially. For example, if my husband gets a bonus check and I’m having a good month for sales from my Amazon store, my mindset shifts, and I feel less urgency to save. Then I look at our debt total, and that brings me right back to reality. :)” Her comment begins with an understanding of her thought processes, moves on to some analysis, and it ends with a new control over her own response.

Amy has changed the way she responds to extra income, and we have changed the way we respond to times of celebration. Are you aware of your own triggers when it comes to money? Do you think you’re powerless to change them? Think about the way you think, my friends. You have more power than you realize.


Your comments are welcome.


18 comments on “Metacognition in Personal Finance

  1. Well first Happy Anniversary! We had to change our mindset to begin to take control of our money. Celebration was certainly one of our triggers, holidays, birthdays, etc if we didn’t have cash to spend credit cards were used. We had to learn to cut back, say no and realize it would be okay to and more appreciated if we gave less.

    1. Thanks Brian! Giving less expensive gifts at times of celebration is something that probably isn’t even noticed by the recipient. We spend half of what we used to on Christmas gifts for our children, and we haven’t heard a single complaint. Events can certainly be celebration – without triggering binge spending.

  2. My husband is such a frugal guy, that whenever he suggests spending (during budget meetings), I literally don’t question it. Whether its a new screen for his phone or a family vacation, I just assume that we should work it into the next budget. I know budgeting is supposed to help with metacognition, but I guess love makes me do crazy things.

  3. Haha! #3 trigger was me exactly! Anytime Mrs. SSC suggested spending, (she is more prone to saving and being frugal) inwardly, I’d channel Monty Burns and rub my hands together thinking, “excellent!” Mainly because I knew she’d already bought in and I wouldn’t have to sell her on whatever the splurge was. Have I mentioned I’m still not great with money? I’m doing better and blogging about it and tracking it has helped, but it seems like I can still work on my metacognition.

    That sounds like a great way to spend an anniversary by the way!

    1. Thanks, Mr. SSC. It was a great way to spend an anniversary : ) Blogging about our debt reduction (and savings now) has helped me too. I’m not naturally good with money yet either (I’m hoping it will all become second nature once these habits really sink in), and I think we’re in good company. The good news is that people like us can steer ourselves towards a fabulous financial reality despite all of our triggers to spend.

  4. Love this! I like the last couple things you mentioned in this post about judgment. I think we can too easily beat ourselves up. But what does that accomplish? It reminds me of meditating where you are just supposed to try and recognize things as they are happening without judgment. I realized the other day that if I’m temped to spend, I just need to open my budget. Just that simple move. I wanted to buy an early fincon ticket because it was never going to be that cheap again, but my budget this month was depressing, and I wasn’t about to add more to the red numbers.

    1. The ability to “recognize things as they are happening” is key to any effective change. How can you respond in the moment if you aren’t even aware when the moment is happening? I’m sorry to hear that your budget this month is depressing, but you’re keeping those red numbers at bay, and that’s definitely the right thing to do. Here’s hoping that next month’s budget is enough to wash away the red!

  5. Happy Anniversary Ruth!! 🙂

    Yes, it is definitely easier to spend when things are going well. We’ve all been there. But I am glad that you and your husband were still able to celebrate such a great occasion and spend less money! 🙂

    1. Thank you, Mackenzie : ) I would be sorry if for the sake of frugality we didn’t celebrate our anniversary at all. There is such a huge range of spending-to-celebrate from which to choose. Choose the lower end, and if you’ve hit it right, you’ll find that “less is more.”

  6. Metacognition. A great word and action, “thinking about thinking.” It reminds me of a word that has long intrigued me, ‘Epiphenomenon’ which is a secondary phenomenon that occurs alongside or in parallel to a primary phenomenon.

    Anyhoot, for the most part, I am aware of my money triggers. Somewhat different than Amy, when things are going well financially for me, I have a tendency to save/invest more.

    1. If you are triggered to save and invest more when finances are good, I say keep that trigger going! And great word : ) You’ll have to write a post about epiphemonena that relate to personal finances.

    1. Thank you, Kristi : ) Being aware is key to overcoming these old habits. I find if I’m aware enough to catch myself right at the moment of temptation, I’m able to shift my response. I’m sure you can do the same on your way to creating new habits. Maybe some day, we’ll both be like Savvy James and be triggered to save more when the going is good.

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