Monday, October 22, 2018

Mental Accounting and Money Jars

Money is 'fungible'. That means that if I give you a dollar, and you give me a dollar... nothing has changed. It allows things that aren't comparable to be compared. If you are able to give them a price. It allows us to plan and make decisions. Mental Accounting is a way we put things into categories to try an evaluate outcomes. By ordering and grouping, we can direct our attention in a way we think best. All this is made up. It is a way of pushing a story that makes sense to us onto the world, to help us choose to go left or right. You can put money in a jar for going to the movies. You can put money in a jar to buy a bicycle. When the money is the Movie Jar is finished, you can say you have no more money to go to movies. Even though there is money in the Bicycle Jar. The jar is a story. The question isn't whether the story is true, it is whether the story is helpful.

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