Does how you pay impact what you buy?

Ostriches, afterpay and the Pain of Paying.

Spenditude author Janine Robertson looks at why shaking up HOW you pay can make you more aware of WHAT you’re spending.

Does a bad coffee purchased with cash taste worse than a bad coffee bought on credit? 

Yesterday I bought a coffee.  Nothing wrong with that.  But I didn’t enjoy it very much and buyers regret kicked in.  I had pulled the last coins from my wallet and scrounged a few from the car too.  Would I have cared about the bad coffee as much if I had paid on a card or on my phone? 

It got me thinking, does the way you pay matter?

We increase the ‘pain of paying’ when we pay with cash.  In a world where cash is no longer king, we’ve reduced the connection to the payments we’re making and therefore minimised the pain.  Research conducted in 2018 suggested that 86% of Australians don’t know how much they spend each month. This is all because we’ve reduced tangible connection to our money. 

We don’t use cash and we also don’t get bank statements in the post any more.  This further removes us from our awareness of our financial position.  When it is out of sight and out of mind, we find it easier to avoid the uncomfortable.  The unpleasant situation of looking at our bank or credit card statement can easily be avoided in the deluge of email traffic and apps.  It’s the Ostrich Effect.  Ignorance is bliss and it takes a bit of effort to get your head out of the sand. 

If cash is the most painful payment method, the one that is most likely to cause us to stop and think before spending, what is the least? 

That award could go to afterpay.  The modern payment option flips lay-buy on its head.  Get the goods now, pay for them later.  Traditional lay-buy didn’t allow us to take the item until they had been paid for and there was a very real reward to saving the money and paying it off.  Lay-buy might have been the most ‘’painful’ way to pay – slowly handing over money many times - but the anticipation of receiving the goods was long lasting. 

Afterpay gives us the opposite, get the goods now, no waiting and no excitement or anticipation. Keep consuming, pay later.  Make it less tangible.  Decrease awareness (those charges on your bank statement will happen automatically and you won’t even notice).

No matter your style with money – whether you are a Spender or someone that is ‘good with money’ – considering the way we pay can help us to stick to the golden rule to ‘spend less than you earn’.    The more you disconnect with payments – wearables, credit and afterpay – the more ability we have to stick our heads in the sand.  Separating ourselves from our money can influence and even increase our spending. 

Paying with cash might not be as convenient, but it will make you think about your buying decisions. So if you’re having trouble keeping track of your money, switch to cash. You can even go one step further and parcel your money into different envelopes to categorise spending – and when it’s gone – you’re not allowed to spend any more as you’ve exhausted your pool. You might still get a bad coffee though.


Janine Robertson

Janine is the co-author of Spenditude - A life-changing Attitude to Money. Janine holds a BA (Tourism Management) a Diploma in Financial Planning and recently completed a Certificate in Behavioural Economics.




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