Watch this video on the Pain of Paying by Prof. Dan Ariely of Duke University at h. He discussed the pain of paying and suggested some ways to increase the pain of paying, such as use cash, receive a notification every time you use your credit card or increase salience.

Now you stop using credit card for this week (of course you use cash) and report whether the increased pain of paying helped you to make better spending decisions. Submit all your receipts (remember use cash) with your submission

Pain of Paying

Just as Professor Dan Ariely notes, the pain of paying through cash arises especially if an individual has to make huge purchases. To me making such purchases tends to feel like a loss, which urges that I should begin planning for any future expenses that I would like to make. Professor Dan and Roth explained it as the feeling that an individual is losing the money they have despite the fact that they feel they need the product they are about to purchase (Dan 2013; Roth, 2010). In my case, purchasing using cash tends to discourage any huge purchases all at once unless I feel I had already planned what I was going to purchase. In that case, I would be aware that I have no other option but to purchase the product although I still the loss of the money. On the contrary, having cash in the pocket tends to allow purchases of small items or lowly priced products especially snacks, which may not warrant an individual to get a receipt.

Thus, by having the money in the pocket an individual will tend to be more prone to purchase lowly priced items (cheap items) even though they may not necessarily be what one needs. I also noted that when the money is in the bank or I am not having the card on me, and I only have few notes, I was less likely to spend than I would be able to spend if I had the card and knowing that I have the money in the bank. This is not to mean that if I have the card and I am using cash I am likely to spend, but rather it means the propensity just increases as I have a second option. In fact, every time I feel like going to the bank to get more money, I get the sense that I will be losing my cash to spending which is partly what Professor Dan describes as pain. Lastly, whether I was using a card or cash, the product I was purchasing played a role as I have already established those products I feel as needs in my life, which means I may not compromise on the money I will spend. Such include the basics food products. Catherine has presented this aspect in her huffing post article (Catherine, 2012).

References

Catherine. New, (June 7, 2012). Cash Dying As Credit Card Payments Predicted To Grow In Volume: Report. Huffing Post. Retrieved from http://www.huffingtonpost.com/2012/06/07/credit-card-payments-growth_n_1575417.html

Roth, J. (2010). Your money the missing manual. Sebastopol, CA: O’Reilly Media.