It's easier than ever to spend money, thanks to technology that allows you to make purchases with just a click or a tap. But feeling the pain of paying — through mindful spending techniques, or simply by using cash — can help you make better spending decisions.
"The pain of paying is this idea that when we pay for something it stimulates the same region of our brain as physical pain," says Jeff Kreisler, editor-in-chief of PeopleScience.com and coauthor of "Dollars and Sense: How We Misthink Money and How to Spend Smarter." In theory, that pain might make us stop before we get to the register and question whether we're making a good decision. "But instead what happens is, instead of feeling the pain, we numb the pain," he says.
Modern technology — paying with your smartphone or with a credit card, for example — makes people less conscious about their spending because the actual payment happens later. "It can be a real problem with spending; the more automatic things are, the more easy it is to spend," Kreisler says. "And that's not always good."
Say you pay for a meal at a restaurant with a credit card. "You're not paying, you're signing a promise to pay later," Kreisler points out in the video above. When the credit card bill arrives weeks later, "you don't really remember that one meal amongst 100 different charges, so we don't feel that decision, we don't think about it consciously."
When you buy something using cash, though, you can actually increase your emotional attachment to whatever you are buying, a 2015 study published in the Journal of Consumer Research suggests.
Here are some of Kreisler's tips to be more conscious and thoughtful about your spending decisions:
The good news: The same type of technology that can lead to poor spending decisions can actually help encourage better savings habits and make it easier to invest for the future. "This concept of the pain of paying can be dialed up or down," Kreisler says. "If saving becomes painless and automatic, that's a good thing."
Looking to combat some other common mental traps? Check out the below Grow resources:
More from Grow: