Have you ever wondered why casinos have you gamble with chips instead of cash? It’s a psychological tactic—losing chips doesn’t feel like you’re losing money, even though you are. Now, I’m not old enough to gamble, but I’ve still experienced what psychologists call the “cashless effect.” As an online shopper in the digital age, it’s all too easy to forget that clicking a BUY NOW is still a purchase.
Simply put, digital payment traps us in the illusion that we’re not actually spending money, and it’s making us careless spenders. Handing over a crisp, hard-earned $20 bill feels different from just swiping your credit card or tapping your phone on a reader.
In 2023, Dr. Jashim Khan, Director of Business Management at the University of Surrey conducted a study where a participant noted, “Digital money doesn’t feel like spending your own money; there is no concept of money, but cash is different; it always feels like your money is decreasing when you use it.”
So, as the holiday season comes into full swing, we’re all going to be fighting our spending impulses. Between gifts, deals, and the temptation to buy a little something nice for ourselves, opportunities to spend are on every corner. In fact, the average consumer is going to spend close to a thousand dollars on holiday presents alone.
This winter, try to be a little more aware of what goes in and out of your bank account. I’m not saying that you shouldn’t buy gifts—that’s half the fun of Christmas—but it’s important to at least be aware of how much you’re actually spending (and whether or not you can afford it).
Let’s have another delightful season of giving, while remembering to keep some financial grace for ourselves.
