The mental accounting process of an individual plays an important role in financial decision-making. Little is known, especially in the Indian context, about individual differences in mental accounting and its influence on their financial planning. The study aims to understand the role of the mental accounting system of individuals in financial decisions. The authors also explore the influence of the individual’s cognitive ability in financial decision-making and name the antecedent as financial cognition. Partial least square structural equation modeling has been used to analyze the data. The analysis of the data supports the mediating role of mental accounting between financial cognition and personal financial planning. The result establishes the fact that the individuals’ financial cognitions influence the mental accounting process and reinforce the role of psychological processes that drive financial decisions. The study would be helpful to financial planners in customizing personal financial planning with the understanding of financial cognition and the mental accounting process and would be helpful to the financial professionals and advisors in understanding the influence of mental accounting in saving and expenditure patterns.