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The psychological effects of money

The psychological effects of money

I noticed something recently that hadn’t come to my attention before: I feel differently when I have a larger sum of money in my checking account.

To me, money in my checking account equals money available to spend.

(I don’t normally keep money in there unless it’s for spending on bills or things that I want. I let my account get very, very low. Sometimes down to a couple of dollars.)

On the other hand, money in my savings account equals money that is NOT available to spend, except for a particular purpose in the far-off future. For example, I’ll save up money for a vacation for a year or more, and then transfer it to my checking account when I’m ready to use it for the vacation.

Well I did the same thing for my taxes. I knew I was going to owe, so I saved up all year. The money sat in my savings account, just waiting. When it got close to time to pay, I transferred the money to my checking account.

Except it sat there for a few days before I actually paid.

I noticed that I actually felt differently when I had the money in my checking account than I did when I had it in savings.

I bought stuff without really thinking about it, knowing that I had plenty of money in my account.

I let my receipts pile up longer before entering them.

It was the same money, just in a different place. The only thing that changed was how I felt about it. It became easier to spend, even though I knew for a fact that I could not spend the amount I needed for taxes.

I just felt different, psychologically.

Have you ever experienced anything like that?

View Comments (5)
  • I used to think that way about money when I was in debt and had no budget. I pretty much said to myself I have the money and what I buy will benefit me.

    That is one part of why my debt either kept growing or stayed the same

  • It became easier for you to spend? That is interesting, for me it is just the opposite. Tomorrow’s article is my take on spending my money vs using a credit card, and maybe that is why there is a difference in emotion between you and I. Interesting article though.

  • If I wind up with a few extra dollars in my wallet, I find that I’m more apt to spend it. It’s not that I have a greater urge to spend, just more of an opportunity.

  • I manage my money the same way & feel the same way.

    BTW- I love that I can count on you for a new post everyday. It feels like a lot of blogs are slowing down lately but yours always has a fresh post. Thanks!

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