We know we spend less when we just use cash, and yet we continue to use credit cards. A 2001 Massachusetts Institute of Technology study found that subjects asked to bid on a basketball game bid TWICE as high when they used credit cards, versus when they used cash. Not surprising.
When we use a credit card, we treat it like Monopoly money; we seem to lose sight of the debt we're carrying, so we figure we can spend more. It’s like being on a diet and cheating with one slice of pizza. You figure, “Well I already messed up my diet today, I might as well have another slice and forget about it until tomorrow...” Next thing you know, you've eaten more than your share of the pizza, definitely more than you should have. If you really want to be more conscious of your spending, use cash. After all, you don’t really want to eat the whole pizza, do you?
Read more about it on Boston.com: Your brain on shopping by Carey Goldberg.
Today's DailyWorth was provided by our regular contributor Galia Gichon. Galia is an independent financial advisor and educator based in NYC. You can find her at DowntoEarthFinance.com. Galia also provides editorial support to DailyWorth to ensure that our reporting is factually and financially sound.