Sunday 5 July 2009

Mental accounting


So I spent £88 on some fancy luggage from John Lewis. I also bought my weekly shop at Waitrose. All I need now is a mortgage and I'm officially middle-class.


Apparently in savings theory there's something called "mental accounting." It means that we segregate expenditure in our heads; allowing us to save up for something whilst running up credit for something else. I do that a bit, but I'm also a bit "mental" about worrying about spending money on certain things whilst happily splurging on other things. So I don't worry at all about buying shoes, books, dresses and make-up, but I struggle to buy perfume (I think it's overpriced) or pay for massages or manicures (an extravagance). Similarly I don't own any expensive jewellery. The most expensive piece of jewellery I own is a mirrored plastic cinderella coach and horses by Tatty Devine that everyone I know thinks is tacky. I don't mind that it's tacky, it makes me smile.

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