Some of our money-saving habits could actually be costing us money:
The first bad money habit: Not carrying cash. A study at MIT found that people using plastic are willing to pay twice as much for items as people paying in cash. That’s because paying with a credit card distances us from the transaction. And makes it feel like we’re spending play money.
Another habit that’s hurting our finances: We compartmentalize our spending, and cut corners on some things, while we splurge on others. According to Brown University economist Justine Hastings, most of us separate our money into categories based on its intended use. For example, we’ll go out of our way to buy cheap gas, but we’ll splurge on supermarket sushi. That’s because we think of things like gasoline and groceries as two unrelated budget items - even though all the money is coming from the same place.
The next bad financial habit is for us guys: Shopping with friends. A study in the Journal of Marketing Research shows that men spend 54-percent more when we shop with a buddy. While women spend the same whether they’re shopping solo, or with friends. The researchers say it’s because men get competitive, and try to outdo each other, while women see shopping as a social activity, so they don’t feel the need to show off.
And the final money-wasting habit surprises most people: Having multiple bank accounts. You’d think that having several different accounts would encourage us to save. But, the opposite is true. That’s because having multiple accounts makes us feel richer than we actually are. Which makes it easier to justify over-spending.