Ever felt like you know what to do with your money… but still don’t actually do it? You’re not alone. Knowing isn’t the hard part — doing is. That gap between intention and action trips up even the most well-meaning savers and investors.
Whether you’re trying to stick to a budget, start investing, or stop checking live ASX market news every time the markets dip, there’s one psychology trick that can help: creating mental distance.
It sounds simple — and it is — but understanding how (and why) it works could completely shift how you make financial decisions.
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What Is Mental Distance, and Why Does It Matter?
Mental distance is exactly what it sounds like — putting space between you and the immediate emotion or urge you’re feeling. It’s a way to move from reactive thinking to reflective thinking.
Let’s say the markets drop, and you panic. Your first instinct might be to sell. But when you apply mental distance, you pause. You step back. You ask: What would I tell a friend to do in this situation? That moment of mental space gives you clarity — and often, the smarter move reveals itself.
The truth is, most bad financial decisions don’t come from ignorance. They come from acting in the heat of the moment. And mental distance helps you slow that moment down.
How to Use It in Real Life
You don’t need a therapist or a mindfulness course to build this habit. Just a few simple strategies can help you step back and make more thoughtful money moves.
1. Use the “Future You” Test
When facing a money decision, ask: How will I feel about this in 6 months? or Would Future Me thank me for this? It’s a subtle mindset shift, but it turns your attention from immediate gratification to long-term value.
Example: Tempted to splurge on a new gadget? Picture Future You — possibly annoyed about the credit card bill or grateful you saved that cash. That image helps guide your choice.
2. Write It Down — But Don’t Act Yet
Whenever you feel the urge to move money, invest, or make a big purchase, write down what you’re planning — and why. Then wait 24 hours.
Often, you’ll come back with a clearer head and either feel more confident or realise it wasn’t such a great idea. This delay tactic is especially helpful during market volatility when emotions run high.
3. Talk to a “Money Buddy”
Having someone you trust to talk through decisions with — a partner, friend, or even a financial adviser — can help create instant distance. Saying your thoughts out loud makes them real and often reveals gaps or assumptions you didn’t notice on your own.
Why This Works for Money (and Not Just Mindset)
Money decisions are loaded with emotion — fear, excitement, anxiety, hope. Most of us think we’re being rational, but studies show our brains are hardwired to take mental shortcuts, especially under stress. That’s why people sell at the bottom of the market or overspend after a bad day.
Mental distance interrupts that cycle. It gives you just enough space to let logic back in the room.
Here’s where it’s especially powerful:
- During market drops (don’t sell in a panic)
- When tempted by impulse buys (check the “Future You” test)
- When making investment choices (avoid chasing hype)
- When comparing yourself to others (especially on social media)
Bonus: Apply This Trick to Your Goals
It’s not just about avoiding mistakes — this mindset can help you reach your goals faster, too.
Let’s say you’re saving for a house deposit. Rather than just “saving money,” picture yourself walking through that front door. Print out a photo of a home you like and stick it on your fridge. The more real and visual your goal becomes, the easier it is to keep making smart decisions that support it.
At the end of the day, you don’t need to be a finance expert to make smarter money moves — you just need a few tools to manage your mindset. Creating mental distance is one of the simplest (and most effective) ways to reduce stress, avoid regret, and stay focused on what really matters.
Try it next time you feel pressured to act fast with your money. Pause, step back, and ask: What would Future Me want me to do? The answer might surprise you — and your bank account will likely thank you for it.