Money used to be a tangible asset – one that people counted, carried in their pockets and hid under their mattresses. But with the advent of credit cards – and now, contactless payment systems – cash is becoming somewhat of a rarity; rather than holding it in our hands, we exchange it electronically. And while this is certainly convenient, it’s not such a good thing when it comes to our spending.
In fact, studies suggest that using a credit card drastically affects our spending behavior. Debit cards have a similar – although less powerful – effect. Now just imagine what happens when a transaction becomes little more than a flick of a smartphone. It’ll feel sooo easy. And that’s exactly the problem.
Unlike the cold, hard cash people used to carry around, today’s money isn’t real; it’s just a number in a computer somewhere. Not only can we spend it almost unconsciously, but when it’s gone, we aren’t even left with a physical reminder like an empty wallet – just a negative balance and another card that we keep right on swiping. This is why consumers need to break new ground in how they think about their digital money.
Check out some of the psychology behind paying with plastic and get some tips on how you can triumph over your brain’s budget-breaking tricks in my new article on GoldenGirlFinance.ca: http://bit.ly/SgX94L