WHAT IS IT
What is mental accounting?
Treating money differently depending on where it came from
You spend gift money on junk food but not your own money. Why?
Mental accounting
Why do people with this bias spend gift money faster?
It feels free to them
What’s one way to fix it?
Treat all money the same
Is $100 from a paycheck the same as $100 from a gift?
Yes — they are the same value
You save your paycheck but spend your tax refund. Why?
It feels like extra money while you categorize your paycheck into not needed
Why do people create "money buckets" in their mind?
To feel more in control
What tool/apps helps you plan spending?
A budgeting app
What kind of bias is mental accounting?
A money-related bias and a thinking bias
You buy shoes with a gift card but wouldn’t with cash. What is this?
Mental accounting
Why is this a problem?
It can cause poor money decisions
What question should you ask before spending extra money?
“Would I do this with my paycheck?”
Is mental accounting helpful?
No — it can lead to bad choices
You blow your bonus on a party but save your normal pay. Why?
You see the bonus as “fun” money
What emotion causes this bias?
Excitement or guilt
What’s the “24-hour rule”?
Wait a day before spending found money
What part of the brain is tricked by mental accounting?
The emotional and rational thinking parts of the brain. (pre-frontal cortex)
You won’t use gifted money to pay bills. Why not?
You think of it as "fun spending" money because you didn't make it
What kind of thinking is this?
Emotional, not logical thinking
How do goals help?
They give money a clear purpose