Today we discuss “malleable mental accounting” and how our brain plays tricks on us to circumvent self-control. Put simply, we keep a mental savings account that we use to justify unnecessary purchases.
The best way we’ve found to combat this phenomenon is the pay yourself first system. That way any “savings” you come across can be spent without thinking about it, since your long term goals are being met.
I use Simple.com for my everyday spending and bill paying. It’s one account that syncs with your iphone/web and lets you create buckets of money for different budgeted items. Then at any one point in time it lets you know how much is available after your money buckets and scheduled bill payments. Also when you swipe your card it pop ups very quickly on your phone.
I have two friends with Simple that really like it.
I enjoyed your video and have to admit that I do suffer from this ?malleable mental accounting? disorder! It is one of the challenges of being human and an emotional creature. I know better, yet I sometimes slip back into this thinking. ?
Advertisers have latched onto this concept of ?savings? and the mental gymnastics consumers face. Their items are described in terms of your savings, not what you will have to spend.
Your point about actually transfer money or paying yourself first is when it becomes savings. Without that money sitting in a physical location, nothing is actually saved.