The pain of paying refers to the psychological discomfort people experience when they spend money. It is useful to regulate the desire people naturally have to buy things. It can help explain why people make certain financial decisions.
Essentially, from a money personality and behaviour point of view when people spend money, they experience a trade-off between the pleasure of obtaining the item or service and the pain of giving up their hard-earned money.
Which means we can use that to our benefit! Effective money management is all about knowing what can derail you from flourishing financially, and how to mitigate the impact should this happen.
Merchants want you to spend impulsively!
The easier it is to make a purchase, the less people tend to read reviews, conduct comparison, letting their impulsivity rule.
It’s understood in marketing that the pain of paying can vary depending on the type of payment method used. For example, cash payments are often more painful than credit card payments because cash is tangible and the act of physically handing over money can be psychologically difficult. So businesses are better off providing a way to pay using credit cards.
Credit card payments can feel less painful because the payment is not immediate and the physical act of payment is less tangible. How many times have you felt justified in using your credit card to obtain something that later you felt you actually didn’t need?
Intentional Spending
Mindful money management is all about transacting with intention.
- Will this purchase make my life harder?
- Is there a price comparison?
- Is there a better platform to buy this on (ie safer)?
- Is this aligned with my core values?
Intentional spending is a great framework to help you make decisions around spending and accepting trade-offs without feeling lack. The practice helps you achieve your financial goals and outcomes.
I remember a client telling me about a holiday she was on where they befriended a rich couple. In the course of their week together, a helicopter ride around the region came up. She and her partner were ready to instantly put it on their credit card as an “extra”. The other couple, discussed how to reprofile their holiday budget so they could do the helicopter ride instead. They had planned an extravagant meal out and decided to trade off that for the ride.
In Thomas J. Stanley’s book The Millionaire Next Door, when he interviewed the wealthy for his book, remarkably every one of them did budget and trade off as a matter of money management practice. So you are in good company!
But you do not have to miss your morning lattes!
Here at Mindful Bookkeeping, we do not suggest you forgo your morning lattes purchases, etc… We encourage you to create a space between the actual purchase to decide if it’s in alignment with your core values and not making life more difficult.
Also consider the essence of things you want to buy. Most likely alternatives are available that also serve that essence. And sometimes the alternative is actually better. Sometimes spending more money is the better option too!
A client once told me that she wanted enough money so she could take holidays. I asked her to be more specific. She couldn’t. That became her fieldwork in between sessions. The more accurate you can imagine what you want, the more chance you have of taking actions towards receiving it!
For fun and insight – because we love excavating and mining for Aha moments!
If you spend mostly using phone, debit or credit card try putting the following into practice:
- If you find that you spend money without concern in certain areas of your life or business review if you pay for these items in cash, debit or credit.
- Next time you go spend money, equip yourself with your financial goals before you purchase, relate back to them to consider the impact that spend will have on these goals/desired future outcomes.
- For a week, use a cash basis only for your day to day spending. Compare it to your normal spend pattern.
As a result of this experiment, you may want to change over to cash only basis in some of your spending categories to get better acquainted with your own pain of paying.
Also, start a pin on pinterest or wherever and gather the essence and specific things you want! Think of it as ordering from the universe!
Steps to Mindful Money Management
When you find yourself wanting something, consider the essence of that thing:
- What joy will it bring you?
- How does it factor into your goals?
- Does it match the specificity of what you actual desire?
- What will you have to give up?
- Will this make your life harder?
By being aware of the psychological phenomenon known as “the pain of paying”, individuals can make more informed financial decisions and improve their overall financial well-being by practicing mindful money management and aligning with their core values.
© 2024 Money Detox Ltd. All Rights Reserved.
