Pay in Advance for More Experience
Money can’t buy happiness, but what you spend it on can affect your satisfaction. Plus, how you pay also affects your happiness. To get the most out of what you spend your money on, it’s a good idea to pay upfront for it.
You probably already know that cost and happiness are indeed linked. Some shopping makes us happier than others, and if you want to get the most out of your money, it makes sense to spend it on what brings you the most joy . But our happiness is influenced not only by what we buy, but also by how we buy it.
To combat cost overruns , many personal finance experts recommend paying for things in cash. Consumption is more direct with cash; you feel it more. And it works, according to a study by the Massachusetts Institute of Technology . The researchers found that when paying by credit card, subjects were willing to spend twice as much as when paying in cash. Other researchers call this cohesion : the degree to which payment is related to consumption. Credit cards weaken the grip; cash tightens it up.
But psychologist Hal E. Hershfield brings up an interesting point about this phenomenon. The downside of communication is that we are less likely to enjoy a purchase when we are closely associated with it. It hurts more. For example, the knowledge that you will spend $ 150 in cash at a hotel can ruin your travel pleasure. So Hershfield offers a solution:
If you want to have more fun with what you consume (think about taking a vacation, but feel nervous about how much different things cost), then pay in advance. This separates pain from paying and consuming the experience. Prelek and Levenshtein essentially refer to a concept known as prospective accounting , in which the consumption of what has already been paid for can be used as if it were free. It’s like prepaid for a hotel room and then the pleasant feeling that the room was vacant after receiving a zero balance invoice.
Returning to the hotel example, this would mean paying online several weeks in advance. You are not connected with the payment process and get more pleasure from the trip.
In general, it is about the balance between the pain of paying and the danger of cost overruns. If your goal is to spend less, you may need to strengthen your connection. But if you want to fully enjoy the experience you are paying for, you might want to consider prepaid to loosen the connection.
Either way, it goes without saying that you want to make sure you spend responsibly. For the rest of the post, click on the link below.
How We Spend Affects How We Spend | Psychology today