[Glossary](https://pecuvo.eu/en/glossary/) · The psychology of money # Psychology of money **In short:** The psychology of money studies how feelings, habits and surroundings shape our money decisions — why we spend, save and invest differently from what a calculator would work out. **Simply put:** Classical economics assumed people decide like calculators. Behavioural economics shows that we decide quickly, out of habit and with feelings; Richard Thaler received the Nobel Prize (2017) for exactly this research. That is why knowledge alone is not enough: financial education raises knowledge far more than it changes behaviour. What works is arranging your surroundings so that the good decision is the easy one. **Example:** Elena knows she should save, but month after month "nothing is left". She sets up an automatic transfer of €100 on payday. After a year she has €1,200 without having to decide anything each month. **Watch out:** the psychology of money is full of famous findings that later turned out weaker. In this glossary we say what is solid and what is disputed (⚠ ). **Source:** EU/OECD-INFE financial competence framework for adults (2022) — https://finance.ec.europa.eu/publications/commission-and-oecd-infe-publish-joint-framework-adults-improve-individuals-financial-skills_en · Kaiser & Menkhoff, Economics of Education Review 78, 2020, DOI 10.1016/j.econedurev.2019.101930 ## In depth in the modules - [Module 14](https://pecuvo.eu/en/modules/the-psychology-of-money/) - [Module 24](https://pecuvo.eu/en/modules/investing-the-basics/) ## Related terms - [Hedonic adaptation](https://pecuvo.eu/en/glossary/hedonic-adaptation/) - [Mental accounting](https://pecuvo.eu/en/glossary/mental-accounting/) - [Loss aversion](https://pecuvo.eu/en/glossary/loss-aversion/) - [Delayed gratification](https://pecuvo.eu/en/glossary/delayed-gratification/) - [Herd behaviour](https://pecuvo.eu/en/glossary/herd-behaviour/) - [Social comparison](https://pecuvo.eu/en/glossary/social-comparison/)