Dec. 30, 2022

Financial Psychology: Constraint vs Restraint

Finance is not just a math problem. For most people, a large part of our financial decisions has more to do with psychology than logic. There are complex emotions and thoughts that can influence our spending habits. It’s easy for our imperfect minds to fall into logical traps and spend more than we should, or get things we really don’t need. Many of us think this comes down to exerting more willpower, but it’s not that simple.

Will power is a limited resource, according to recent scientific research.

Just knowing this fact alone doesn’t change much, but it’s a start. I’ve come to learn how to take willpower out of the equation by understanding the difference between these two words: Restraint and Constraint.


1) a measure or condition that keeps someone or something under control or within limits.

2) unemotional, dispassionate, or moderate behavior; self-control.


a limitation or restriction.

Let’s dig into the implications of these words.

Restraint is subject to decision fatigue and constant temptations. When we go through the grocery store hungry and without a shopping list, it’s usually a recipe for disaster, as far as the wallet is concerned. It’s difficult to restrain our wants, needs and desires, and we often will overspend.

So let’s start adding some constraints to the picture. A constraint is a limitation or rule we can impose on ourselves. Going to the store having already meal planned and with a list of items to purchase is a great step in shifting towards constraints, but unfortunately, there is usually little to no accountability to anyone but ourselves. If we were to only take enough money for the things we truly needed on our list, that would be an even better scenario.

This has application in many aspects of our lives outside of a quick stop by the grocery store. When we implement constraints into our lives, we take actual steps towards freedom.

Financial psychology
Restrictions, commandments, rules and constraints are often seen in a negative light. If we open our minds we can see how they help us.

Artificial Scarcity

In the book “The Millionaire Next Door,” it is said that many millionaires practice something called “artificial scarcity.” This is essentially a constraint. People who are successful set up protective constraints to help them get where they are going.


  • Contributing automatically to retirement accounts
  • Contributing extra income to a separate bank account
  • Only depositing that which is needed for the month into the main account
  • Setting time limits for electronic screen time to avoid mindless scrolling, or deleting time wasting apps altogether

A lot of what we do is habit, and a lot of our habits are sparked by our environment, or how easy and convenient it is to make a certain choices. Simply making a bad choice more inconvenient us by a few minutes can prevent us from doing it, while making good choices convenient will yield positive results. Ever since I put my running shoes and clothes right by my bedside, I’ve gone running nearly 30 times this year, compared to about 5 the last couple of years.


Introducing constraints into my life makes it so that temptations and opportunities to spend or waste time are out of the question. Automating my finances intentionally to protect my money and make it harder to access has curbed a lot of impulse spending. When you rely on willpower and self restraint, you enter many battles. Some you win, others you lose. Why go into battle at all? Why should we rely on our irrational minds and bad habits when constraints are so much easier?

Additionally, it helps to have a partner in accountability, whether a friend, spouse or roommate, as I described in my last post.

It’s Stuable: What constraints can you implement in your own life? Comment below.