Money Abstraction Techniques: Credit Cards & Casino Chips

Email  Print Print  

The easiest way to get someone to spend money is to trick them into thinking they’re not spending money. Ask anyone who has a huge credit card balance (and has since reformed his or her way) and nine times out of ten you’ll hear about how when they spent it on their plastic and how it didn’t even feel like they were spending money in the first place. Ask anyone who has gambled away a few bucks without even realizing it and you’ll see that it’s simply more money abstraction techniques at work. Casino chips don’t feel like money, they don’t smell like money, they don’t look like money and when you “spend” them – it doesn’t feel like you’re even spending money. That’s the trick and here’s how to combat this.

Technique #1: Track Your Spending
If you don’t have a budget yet, you should make one and track how much you spend in a spreadsheet like Excel. It sounds simple but the moment you start recording every little expense is the moment you take a little bit of the abstraction away. You spend cash, enter it in. You spend on credit, enter it in. You move the concept of spending away from the action and towards the entry in your log. By recording you also are able to create a potential competition for yourself. Did you spend $200 eating out last month? Can you cut that down to $180? How about $150?

Technique #2: Limit Yourself to 3 Credit Cards
You don’t need more than 3 credit cards so why carry more than 3? Each one should be marked with a specific purpose. Your 5% cash back on gasoline should be clearly marked and used only for that. The more credit cards you have, the more you have to remember, and the more likely you are to spend on the 5th because that balance will “only” be a “small number.” Don’t let the mind games begin, either cancel the cards or stuff them in a drawer so you don’t bring it with you.

Technique #3: Use Debit Cards
You can only spend what you have in your account and the money disappears as soon as you spend it. While you do abstract a little bit of it away, watching your balance shrink will be a constant reminder of how much you’re spending.

Technique #4: Don’t Use Credit
Buy everything cash and you won’t have to deal with abstraction (but you will likely deal with lots of loose change).

None of the techniques (except maybe #1) are the best in terms of overall financial correctness but we’re focusing on folks who can’t overcome the abstracting away of money. While it’s better to use credit over debit because of cash back and grace period reasons, if you can’t do it prudently then using debit is better than using credit.

Financial maturity and discipline are necessary whenever you’re dealing with credit because it’s hard to connect the card with the money. It’s even harder when you don’t even realize what the card companies are doing. And it’s even harder still when you can buy a television that’s a few thousand dollars, put it in your house, and simply pay off the credit over a long period of time. Who doesn’t want to enjoy a nice flatscreen while paying on a few bucks a month?

If you have anything you do in particular that works to trick or remind yourself that you’re spending money when you’re using plastic, please share! Thanks!

{ 3 comments, please add your thoughts now! }

Related Posts

RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

3 Responses to “Money Abstraction Techniques: Credit Cards & Casino Chips”

  1. LAMoneyGuy says:

    I actually find that Ones and change have the same effect on me. I think I’m more reluctant to spend using a credit card because I know I’ll see it later. When cash is gone, it’s gone.

    But I totally agree about casino chips. They have even taken it to the slot machines. Have you seen the “vouchers” that you get instead of a bucket of nickels? Yes, it’s cleaner, and easier to carry. But, which are you more likely to put back in to a machine, thirty bucks worth of nickels that you are lugging around, or a piece of paper with the number “$30.15” on it?

    If it’s me, the nickels are going straight to the cashier’s cage.

  2. Weekly Roundup – 05/19/06

    Here’s a smattering of links that caught my eye over the past week from the various members of the MoneyBlogNetwork…
    Flexo of ConsumerismCommentary wrote about the cost of raising a kid from birth to age seventeen. He also talked a bit abou…

  3. Trent says:

    This is nothing new. At one time gold was currency. Then it was paper that was backed by gold. A level of abstraction. Then the paper was no longer backed by gold. Another level of abstraction. Then credit cards, etc.

    Why do you think the government requires that taxes be withheld? Because they know if you had to write a check for the whole amount each year you would vote every incumbent out of office until taxes were lowered by a lot! By never giving you the money in the first place, it really seems as though you aren’t spending it.

Please Leave a Reply
Bargaineering Comment Policy

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2016 by All rights reserved.