I graduated with a double major in college – studying both psychology and economics. It was a somewhat unusual combination, but I always thought it fit. After all, there’s a huge impact of psychology in the world of economics. Emotions and thoughts impact what you are willing to purchase, how much you are willing to spend, and when you decide to buy.
Psychology also has so much to do with personal finance, specifically how you, the consumer, perceive prices.
Spending $1000 on clothes sounds like a lot, doesn’t it?
What about $100? Pretty reasonable, right?
What about $100 a week for 10 weeks? Well, that makes things a bit more palatable, doesn’t it? But it’s still the same $1000.
I hate spending $225 on my hair cut/color, but if I break up the appointment into two (cut and color) it sounds so much better.
When you spend money, think about the psychology of it. Are you still spending a lot of money, just in a way that seems better?
