Does your “wallet hurt” when you pay?

In the “Decisions using your head” series, we will focus today on the pain of paying. When we pay, our wallets hurt, not only metaphorically but in a real way. According to recent neurological studies, paying stimulates the same brain regions as physical pain.

This harsh reality should encourage us to be more responsible with our purchases. However, it may also lead us to adopt certain habits to minimise the pain, which we should be aware of:

  • We decouple the moment we consume from the moment we pay: when payment and consumption concur, we are more aware of what we are spending and tend to enjoy our purchase less. But when we pay before or after the purchase, we forget that the payment has been made (or is going to be made) and we feel almost like we have gotten something for free, making it more enjoyable.
  • We group losses together: we tend to group expenses to lessen the pain. Lumping together many different kinds of payments reduces the impact and pain which each of the payments would have inflicted on us separately. 
  • We minimise the loss, making it less emotional: the less we focus on the payment, the less painful it seems. Out of sight, out of mind!

Actually, paying with a credit card meets the three foregoing conditions: there is a decoupling between when we consume something and when we pay for it, all the month’s charges are settled together and we are less aware of making a payment when we hold a plastic card or a mobile device close to a POS terminal, instead of looking through our purse or wallet for the cash needed.

To counter the pain of paying and our tendency to mitigate it by using a credit card, here are two strategies for you to “use your head” in consumption decisions, avoiding overindebtedness.

  • STRATEGY 1: Set your own credit card usage and credit limits to better control your expenses.
  • STRATEGY 2: Combine the use of credit cards with other payment means that do not entail more debt, such as debit cards and cash.


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