Why do you feel bad about spending cash, but not about making online payments?

[Primark]

Have you noticed one thing?
As bad as it feels when you take out cash or paper notes from your pocket, sending three times more money than you do with a card or digital payment does not feel as bad. In both cases, your money is going. So why doesn't our brain treat both expenses the same way?

Let me explain.
There is an interesting explanation for this in behavioral economics, it is called "The pain of paying".
 https://cir.nii.ac.jp/crid/1360011146037792896
https://www.ovid.com/journals/mlett/abstract/00125025-200112010-00001~always-leave-home-without-it-a-further-investigation-of-the

Psychologists have found that when you take out cash from your hand, the brain treats it like a physical loss. This is why people used to count the cash they had in hand when going to the market earlier. Because taking out each paper note was visibly painful. But digital payment has changed the entire system. There is no physical friction here, no paper notes are changing hands. Just one tap, one OTP, and Done. And the interesting thing is that when the pain of payment decreases, the control of spending also decreases.

A study by MIT has shown that when people use cards and digital payments instead of cash, their tendency to buy unnecessary things increases by 20%-30%. Because the brain cannot fully feel that money as a loss. And that is why spending often goes unnoticed in today's digital economy. Subscriptions are running, auto-renewal is running, one small payment after another is being deducted from your account, but it does not bother or pain you. That is why people spend large amounts of fake money in the fun game of getting rich. Because the brain does not consider them real. Digital spending is much like that. Because if you notice, many apps or sites these days avoid the word money or dollar, so that you do not feel uncomfortable, somewhere it is written 'coin', somewhere it is written 'points', and somewhere it is written 'reward credits'. The reason for this is that the system does not want your shopping to stop. So it changes the word in various ways to give different rewards,  They try to keep you busy with gifts, vouchers. Because the less you think, the more you spend.
And the biggest companies in today's world don't just want your money, they want your attention, your small weak moments of self-control. And the most dangerous thing is that when people don't feel the pain of something, the consequences of that thing also seem less real. So it's important to learn to recognize this magical trap of technology. And it's also important to ask yourself, 'Do I really need this' or is the system showing me the illusion of need? 'Am I really buying', or is it being bought by me? If you can catch the difference between these two, your entire financial life can change. Keep one thing in mind, the most dangerous spending is not the one that hurts you. Rather, the most dangerous spending is the one that you don't feel.

[Somegory]

Hmm, 🤔 maybe.

I don't feel the physical loss when I spend cash, because I am so disciplined that if I can't afford to spend money I am not spending it, they stays in my bank account.

I need cash for one reason only, the merchants at the market aren't accepting transfers, this is the only reason why I get to a ATM machine to withdraw cash.

However I only feel the way you talking about if something unexpected happened and I have no choice than to spend aa big amount of money, this I ain't prepared for so yes this will make me feel somehow.

[Vaskiy]

Personally, I find convenience with the digital payment access. Earlier having cash in hand made me wait for the change and return. Now just a tap lets me pay and leave the counter. With the digital payment access I'm able to schedule my month expenses. All the necessary purchases were added and the same will be made leaving the balance in the account. This makes my savings more effective. By the same time our minds easily move towards making a purchase without thinking much which is not a best practice. however, in my experience it is our mind and the usage of technology with right approach will make our financial life better.

[_act_]

Both paper money (cash) and online money payment are seeing as the same for me, but what I noticed before was that we do not withdraw money in bank into cash because we do not want to spend it, now we are treating the money in bank like what we should spend first. Now I may forget that I have paper money at home but spending just the in my bank account through card payment or through online transfers. But to pay for something, I feel the same for both and I do not feel any pain as long as I have the money.

About buying unnecessary thing with online transfers, maybe you are right or not right, but people were buying unnecessary things before when cash was common than online payments, which should let us have second thought about this. Like I said, we do not withdraw to fiat just because we do not want to spend money unnecessarily before.

[Free Market Capitalist]

Have you noticed one thing?
...
Psychologists have found that when you take out cash from your hand, the brain treats it like a physical loss. This is why people used to count the cash they had in hand when going to the market earlier. Because taking out each paper note was visibly painful. But digital payment has changed the entire system. There is no physical friction here, no paper notes are changing hands. Just one tap, one OTP, and Done. And the interesting thing is that when the pain of payment decreases, the control of spending also decreases.

That’s not something we’ve just found out now; we’ve known it for a long time, and I see that the links you’ve posted are from 2001–2002. I’ve mentioned this myself in other threads related to personal finance, not in a separate thread like this one.  We need to be aware of this, even if we don't pay for everything in cash. I use cash, but I also use electronic payment methods. The key is to understand the concept of friction and act accordingly.

[Fragrance1122]

Have you noticed one thing?
As bad as it feels when you take out cash or paper notes from your pocket, sending three times more money than you do with a card or digital payment does not feel as bad. In both cases, your money is going. So why doesn't our brain treat both expenses the same way?

Let me explain.
There is an interesting explanation for this in behavioral economics, it is called "The pain of paying".
 https://cir.nii.ac.jp/crid/1360011146037792896
https://www.ovid.com/journals/mlett/abstract/00125025-200112010-00001~always-leave-home-without-it-a-further-investigation-of-the

Psychologists have found that when you take out cash from your hand, the brain treats it like a physical loss. This is why people used to count the cash they had in hand when going to the market earlier. Because taking out each paper note was visibly painful. But digital payment has changed the entire system. There is no physical friction here, no paper notes are changing hands. Just one tap, one OTP, and Done. And the interesting thing is that when the pain of payment decreases, the control of spending also decreases.

A study by MIT has shown that when people use cards and digital payments instead of cash, their tendency to buy unnecessary things increases by 20%-30%. Because the brain cannot fully feel that money as a loss. And that is why spending often goes unnoticed in today's digital economy. Subscriptions are running, auto-renewal is running, one small payment after another is being deducted from your account, but it does not bother or pain you. That is why people spend large amounts of fake money in the fun game of getting rich. Because the brain does not consider them real. Digital spending is much like that. Because if you notice, many apps or sites these days avoid the word money or dollar, so that you do not feel uncomfortable, somewhere it is written 'coin', somewhere it is written 'points', and somewhere it is written 'reward credits'. The reason for this is that the system does not want your shopping to stop. So it changes the word in various ways to give different rewards,  They try to keep you busy with gifts, vouchers. Because the less you think, the more you spend.
And the biggest companies in today's world don't just want your money, they want your attention, your small weak moments of self-control. And the most dangerous thing is that when people don't feel the pain of something, the consequences of that thing also seem less real. So it's important to learn to recognize this magical trap of technology. And it's also important to ask yourself, 'Do I really need this' or is the system showing me the illusion of need? 'Am I really buying', or is it being bought by me? If you can catch the difference between these two, your entire financial life can change. Keep one thing in mind, the most dangerous spending is not the one that hurts you. Rather, the most dangerous spending is the one that you don't feel.

I agree with that because when i have money in my bank account i fill the tank of my car and pay with the debit card and when i have cash i think twice before filling it. Same is the case in shopping mall as well , with debit card i don't care what i need to bought and what i don't when i like something i just pick it up even if it is not needed, opposite is the case with cash..

[Boston 2.0]

I think digital payments themselves are not the problem; the problem is the lack of awareness when spending. Online payments have made our lives easier, saved time, and in some cases increased security. But at the same time, subscriptions, auto-payments, in-app purchases, game coins or points—these all distract people from the feeling of spending real money. When money is not seen as “money,” but as coins, credits, points, or rewards, spending feels less real.
That’s why many companies want to make payments as easy and painless as possible. Because if people stop and think when spending, many unnecessary purchases will be stopped. But systems are designed in such a way that users make quick decisions without thinking too much.

[bakasabo]

I dont feel bad when I spend cash and I dont feel better when I make a digital payment. I only feel inconvenience and expect some discomfort if I would be give change from large banknote in coins. I dont know why, but I dont like to keep coins. Especially when there are a lot of them. They are heavy. I dont like to carry pile of coins and that stimulates me to spend them to get rid of them. What leads to making extra purchases instead of making planned ones.

[michellee]

It is about controlling yourself when you want to spend money whether that is digital or physical fiat. If you are very discipline and controlling yourself, you will not just spend money without thinks. You will be careful and only buy the thing you really needed while you are not busy with the unnecessary things.

You will tighten with your expenses because you thinks that every penny is worth and you should use it carefully. You allocate some money for saving and investment (if you have it) and not just for daily needs because you know that your income will not just for buying unnecessary things but you have primary needs for your lives.

[tabas]

This is real, I feel differently when I spend in cash than with the digital payments. Even if there are some fees, sometimes I feel bad for paying that for the convenience but I take it as easy as it can be because it makes things easier for me. But when I take cash out of my pocket, I feel that ownership is gone. The digital payments made it easy and there are times that we think that it is not justifiable to pay some fee for doing these transactions even if we're having an ease for those purchases that we do online.

[joniboini]

i feel like I've read the same topic in another forum before. Is that you too OP? If you are, why are you making multiple threads with little to no replies asking the same question? If you're planning to make a paper or anything similar, publishing a voting form would probably more helpful. My opinion hasn't changed either. I don't feel any significant difference between using digital payments or cash. If I'm spending a ton of money I'd still feel bad.

[JoyMarsha]

I don't know about others, but I see money as what is to be spent, it doesn't matter how it is being spent(cash or bank transfer). So far, what I'm spending the money on, is what I'm in need of at that time to pay for. The time I know that I feel bad about any payment made is if I later find out that I overpaid for something that is less in price

[Pandorak]

The key is how you resist the urge to buy something you don’t need. I’ve personally done this many times, digital payments do make things easier, but on the other hand, they can backfire if you can’t control yourself.

Perhaps one of my biggest expenses is online shopping. At first, i only intended to buy a few necessities, since the prices there are cheaper. But often, Without realizing it, In the end, i ended up buying other things i didn’t need just because i wanted them, not because i needed them. It’s different when making a purchase in person with cash, i really feel the weight of parting with it, even counting it over and over before paying, that’s the reality.

[Cookdata]

It is about controlling yourself when you want to spend money whether that is digital or physical fiat. If you are very discipline and controlling yourself, you will not just spend money without thinks. You will be careful and only buy the thing you really needed while you are not busy with the unnecessary things.

You will tighten with your expenses because you thinks that every penny is worth and you should use it carefully. You allocate some money for saving and investment (if you have it) and not just for daily needs because you know that your income will not just for buying unnecessary things but you have primary needs for your lives.

I'm not sure if people have anything to control over what they need. If you have the money to cover your need, you don't need to have control over them, it's something that you need to fulfill unless you don't have the money to sort them. If you are the type that freelance, do some gigs on the internet, you don't have choice but you must subscribe to monthly internet bundle, it's not even something you can bargain, you need it to make more income.

The problem is that some people don't know how to differentiate between their needs and the things they want. There was a time I was out of the town for 6 months and my cable subscription was on, I was debited for two good months without using it for one day, I just login in and changed my card with one that has no balance and I didn't update it till the 8 month, I can't be paying for what I'm not using. There are some people that are paying for what they don't use, this is where you should be controlling and not waste money.

[Findingnemo]

I am not very comfortable with swiping or taping my cards either, I guess I am more frugal.

But it is true, that is how the majority of people treat their cash from their wallet compared to paying from their digital wallets, this might need the self-realization followed by discipline over our budget allocation and strictly adhering to our savings and investing plans.

When people physically hand over cash, they feel the money leaving their hands, but with cards or digital payments it often feels like just numbers on a screen that doesn't make much of an impact like compared to a wallet that is fat is getting thin when we keep spending the money. That psychological difference is exactly why many end up overspending without even noticing it. Convenience is good, but without discipline it can quietly turn into careless spending habits.

[Hamza2424]

I need cash for one reason only, the merchants at the market aren't accepting transfers, this is the only reason why I get to a ATM machine to withdraw cash.

However I only feel the way you talking about if something unexpected happened and I have no choice than to spend aa big amount of money, this I ain't prepared for so yes this will make me feel somehow.

Actually psychologically we tend to do less work especially when it comes to spending, but it is a subjective thing and the nature of the person depends a lot on this. For example, spending directly in BTC or cryptocurrency is easier for me and I won't even notice it. But if I have to convert it into fiat first and still keep it in banks, then it is the same for me whether I use it directly like cash after withdrawing or spend it online using online payments.

Because it depends on us how we are managing our funds and I usually keep track of my spending, that's why I don't spend much, which I have started recently haha because bro without strictly following a plan you could spend a lot in a month and you won't even realize it until you calculate everything.

[Zaguru12]

About buying unnecessary thing with online transfers, maybe you are right or not right, but people were buying unnecessary things before when cash was common than online payments, which should let us have second thought about this. Like I said, we do not withdraw to fiat just because we do not want to spend money unnecessarily before.

I think this was the narrative before when the banks then weren’t offering online banking nor where there many businesses accepting online payment then. So if one wanted to save money they don’t simply withdraw it from their bank and I would say this worked then because even the time to waste to bank of nearby ATMs then to actually withdraw was more like a burden. But now with online banking advancements I don’t think there is any difference between the two in terms of spending most especially with payment options like fintechs and also crypto payments too. It’s just now about how self discipline you’re.

i feel like I've read the same topic in another forum before. Is that you too OP? If you are, why are you making multiple threads with little to no replies asking the same question? If you're planning to make a paper or anything similar, publishing a voting form would probably more helpful. My opinion hasn't changed either. I don't feel any significant difference between using digital payments or cash. If I'm spending a ton of money I'd still feel bad.

I think we have gone through this discussion that it’s not prohibited that discussions done outside this forum can still be brought here for further discussion provided its actually a good discussion and not against the Bitcointalk ethics and plus the OP should provide the reference link for the old posts if it wasn’t his in the first place

[slapper]

I can't stop thinking about people counting money at the market. Since we considered that and concluded that the problem was friction. We engineered the friction out. Now all are broke and no one knows where the money went.

That counting was doing something though. Tactile, visual, working memory and loss aversion all go off at once and make you pause from letting go of resources. We made this nice multi-layered check in every single transactio. And we threw it away because swiping was faster. The only thing that keeps you from buying whatever the algorithm wants you to buy next is the pain of paying.

Does the fake money in games help train people to dissociate the consequence of spending you talk about? That's no longer restricted to games. All apps that have a streak counter, have a loyalty tier, or have a progress bar are using variable ratio reinforcement. This is exactly the same mechanism that creates addiction to slot machines. Except now it's your coffee app. Your grocery delivery. The system is more effective if you're not thinking.

[Accardo]

Spending money doesn't feel as bad, when more money will be made. All of these factors gets clearer when the spender is in a frugal situation, where they're sure that the money on them has to be saved carefully, or they'll go broke completely, because they're not sure of additional money coming their way in a short time.

[Hewlet]

Have you noticed one thing?
As bad as it feels when you take out cash or paper notes from your pocket, sending three times more money than you do with a card or digital payment does not feel as bad. In both cases, your money is going. So why doesn't our brain treat both expenses the same way?

The numeration of the cash makes it heavier spending it than it's the case with online transfer.  Imagine I'm spending a million of my local currency In cash, it will literally mean that I will sit back spend time doing all the counting of the cash in bulk and giving that out will be 10 times wethier than transfering same amount on my mobile device.

The down side of mobile transfers is that you might be spending so much at a go without really noticing it which is part of the reason why it's deficult checking your Ballance after you've done the transfer because we're wired not to face that kind of reality. If you're a carefree spender, you can waste all your spending by doing quick transfers.