Latest News


Saturday, May 30, 2009 , Posted by Jason at Saturday, May 30, 2009

make money online

Have you even wondered why you sometimes skimp on restaurant meals or deprive yourself of your usual "model" hobby purchases, and then all of a sudden buy a new leather bag or pair of shoes- just like that?

The urge of splurge can hit quick and fast during unguarded moments and before you know it, the trying-hard-to-be frugal guy is separated with his money quicker than anything have your ever seen. These moments of irrational spending may or may not be major enough to cause deep dents in financial plans, but understanding why they happen- and why they normally do- will help you prevent the next one.

An associate professor at the Sloan School of Management, says in a study that " people's complex behavior toward money defy economic theory".

One of his findings is that we all have personal rules when it comes to spending- rules that we think will keep us out of money trouble. One example would be never to buy an item if it's not on sale. When we don't live by the rules, we feel guilty. That guilt is what he calls a moral tax on consumption, which interferes with the pleasures that we get from buying what we buy.

Marketing take advantage if these findings by offering bundled pricing. A home theater system may have additional high-definition television cables included in the package and a set of speakers, plus a table. The cables and table may not be free, but you will feel better purchasing the entire set.

Credit cards are insidious when people don't understand how they work, because they remove the pain of that moral tax or make it appear that the pain is not there. A separate study has shown that most people who pay with plastic tend to spend more that their budget.


Understanding how or why we spend means we have to look into whether we fall prey to the contrived psychological triggers that marketers cook up to remove rationality in our spending. I recommend to try bringing a notebook with you or using your mobile phone to jot down for a month anything you buy-from gum to spam- and what time you want to buy what. Some triggers you should watch out for are emotional, like:

  • loneliness from being away from home or fights with ones
  • advertisements
  • holidays and special occasions
  • sale season and promotions at work. The list is endless.

    After all, there's always a reason to spend if want to find that reason. Taking control of your money will not happen by magic; it will require CHOICE.

    Bookmark and Share

    Related Posts :

  • WHY WE SPEND THE WAY WE SPEND?SocialTwist Tell-a-Friend

    Currently have 0 comments:

    Leave a Reply

    Post a Comment