In 2001, Drazen Prelec and Duncan Simester of MIT ran a simple experiment. People bid for game tickets – one group was told to pay by card, the other in cash. The card group was willing to pay considerably more; in some cases up to twice as much.
The pain of paying
Behavioural economists call it “the pain of paying”. With cash you see money shrink, and the brain logs a small loss. Cards, phones and watches dull that pain. That isn’t bad (it’s convenient and safe) – you just need to know about it.
Get control back without cash
You don’t need envelopes full of banknotes. Just bring a little visibility back into paying:
- Record a spend straight away – ten seconds after paying is enough.
- Check once a week how much is left in your budget.
- Give bigger purchases a 24-hour rule.
- Set limits for the categories that tempt you most.
It’s not about paying less conveniently. It’s about seeing what you pay.
Why it works
Recording a spend is a tiny moment of awareness – exactly what contactless payment erased. That’s why Fiplo shows, after every entry, how much is left in your budget until the end of the month.
The articles are educational and are not financial or investment advice.