“More money, more problems.” It was when I read the mention of rapper Notorius BIG at the beginning of the second paragraph that I felt hooked on the book Psychology of Money , written by Dan Ariely and Jeff Kreisler.
The authors themselves make it clear that the aim of the book is not to educate anyone financially, nor even to tell us what we can or cannot do with our money. The focus is to explore the mistakes we make in finances and, ultimately, to analyze why we make mistakes.
Below, check out the most impactful points of the book in my opinion!
What is money?
Money represents value, it, in itself, has no value! In event planner email list fact, what we call money is just a piece of paper — what is valuable is its meaning.
Basically, what we know as money has fixed characteristics:
generic: it is possible to exchange money for (almost) anything;
divisible: we use money to purchase all types of items, regardless of the value of the product or its size;
interchangeable: a R$10.00 note is worth as much as another R$10.00 note, regardless of where and how we obtain it — this principle is known as fungibility;
storable: money does not get old or deteriorate (unlike other goods). It can be used at any time;
It is a common good: it can be used by everyone and for (almost) anything.
Even so, because we have a limited amount of money, we can't do everything, which means we need to make the right choices.
The representativeness of money
Did you know that we are more likely to spend when we don't have cash on us? This is because, most of the time, money is a representation of pain, so we feel a certain discomfort when spending it .
On the other hand, when we use a credit card or an e-wallet, we don't have that feeling of loss — consequently, the negative feeling is smaller (at least, until the card bill arrives).
An example that makes the most of how easy it is to make purchases with “virtual” money is e -commerce : have you noticed that most of them save your card details for your next purchase or even allow you to make a purchase with just one click? This practice makes the purchasing process easier, making people spend more , since they think less about what they are doing.
Another point highlighted in Psychology of Money is that the niche of companies that explores this issue of representation a lot is casinos. Think about it: you arrive, go to the cashier, swipe your credit card and buy X number of plastic chips. From that moment on, your goal becomes to spend as many chips as possible (in order to accumulate more, of course — although this doesn't happen most of the time) — this happens because our minds dissociate money from chips.