Save Money by Accepting the “pain of Payment”

If you’re trying to get your expenses in order, one of the most effective ways to do so is to accept the “pain of paying,” as Joe Pinsker writes in The Atlantic . This means, firstly, that you have to pay for things in cash, not on credit. Because credit cards allow us to buy now and pay later, we tend to be better at shopping and spend too much money; paying in cash is a more brain-painful way to buy something because you immediately part with your money.

By curbing that pain of payment, you can save some money on discretionary spending, writes Pinsker, who says he writes every credit card transaction to his phone after it’s done. “After I buy something, I log the transaction on my phone, recording the price and what I bought,” he writes. “The idea is to increase the inconvenience of paying, especially with a credit card, by forcing myself to note what I’m spending.”

After the rule was introduced, Pinsker estimates that his discretionary spending fell 10-15 percent, adding that while it increases pain in the short term is a good way to avoid impulsive spending, it eases the pain of not knowing how much your bill will cost. by credit card. be in the long run. A win-win.

One way to improve the Pinsker system, suggested by behavioral economist Dan Ariely , is to register purchases before making them. This is more likely to prevent unnecessary spending.

Another suggestion from Arieli is to think about what else you can buy with the money you are going to spend. For example, you can set a rule that you have a certain amount of money that you can spend each week, and any money left over at the end of the week can be spent on dinner.

Budget trackers like Mint offer ways to do this, but the idea of ​​logging your transactions in a Notes app (or something like Bear or OneNote) has a simplicity that can be appealing and less time consuming than breaking things down into categories.

Pinsker notes that the system will not solve all your money problems. “You can usually save more from renegotiating your auto or home insurance policy or phone bill than from missing a minimum cup of coffee,” he writes. And making so many micro-decisions can exacerbate your financial stress. After all, spending some on frivolous things is okay . But if you’re trying to cut back or better understand your discretionary spending, this is a good system.


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