Pay in cash to spend less

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

It turns out that how we pay affects how much money we spend. Scientists have found that when using cash, people tend to be more sensible in spending.

A recent study sponsored by the Consumer Financial Protection Bureau found that we tend to spend less money when we pay in cash.

Research by Brett Theodos, Christina Plerhoples Stacy, Margaret Simms. … attended by 14 thousand credit card users who were already in debt. The goal of the experiment is to test whether the simple principle of paying for purchases in cash will help these people reduce their card debt. The researchers have established two rules.

The first was that for all purchases that cost participants less than $ 20, subjects had to pay in cash only. According to the second rule, study participants were constantly reminded that paying with a credit card can add 20% of the value to their purchases. These reminders were sent to subjects by email and displayed through banner ads. The participants in the experiment were even sent magnets with appropriate tips.

As the results of the study showed, all these actions led to the fact that after half a year, the subjects' debt on the loan decreased. The average difference was $ 104.

It might seem like a small amount for six months. But when you regularly pay interest on credit loans, it turns out to be quite significant. In addition, according to a 2012 study, people used a credit card to choose products based on product characteristics rather than price, and often overpay.

Previously, scientists discovered Avni M. Shah, Noah Eisenkraft, James R. Bettman, and Tanya L. Chartrand. … that the things we bought with cash are usually of great value to us. This way we better feel the very fact of the purchase.

In several experiments, the researchers compared the effect of paying by card and cash. During one of these experiments, subjects purchased mugs for $ 2, paying in different ways. The researchers then asked them to sell the mugs and let the participants set their own prices.

As a result, those who used cash asked on average $ 3 more than those who paid by credit card.

In another phase of the study, participants were asked to donate $ 5 each to charity. Those who donated the amount in cash felt more satisfaction from this action.

The researchers concluded that even with the same value of purchases, the value of the purchase is felt much stronger when paid in cash.

According to psychologists, in this case, people experience more painful experiences from parting with money, so the purchased things are of great importance to them.

If you think you are spending too much money, you can take advantage of the above. Try to pay less frequently with your credit card. Paying in cash allows you to better track where the money is going and, accordingly, spend it more wisely.