Dec 2021

The Pain of Paying

Have you ever felt that it actually hurts to pay for something? It could have been after buying that new office chair, or those fresh pair of kicks, then checking your account balance and thinking: They actually took my money? This phenomenon that humans often feel is called the pain of paying.

The Psychology Behind It

The pain of paying is the negative emotions we feel what it's time to pay for something. Sure, we get that boost of serotonin when we go window shopping, or ask for details about a product. But the process of actually paying for these items is a whole different story. 👉

As humans, we hate losing. We avoid losing something as much as possible, and the negative feeling of loss is usually much stronger than the feeling of equal gains. This is essentially why certain transactions hurt. When a payment goes through successfully and we see our money go down, the feeling of pain goes up.

Your Types of Purchases

The types of items you buy plays a big role in the pain game. Did I really need an extra pair of dumbbells? Do I even workout that often? Did I really need that jumpsuit? Where do I even go these days? 🙇🏻‍♀️

The strength of the negative emotions you feel when placing a payment on something doesn't solely come from the amount you're paying. Think if it this way: A washing machine for your new home vs. a luxury handbag, or a laptop vs. a clothing shopping spree. Which purchase would be likely to hurt more?

While buying a want rather than a need gives us immense joy in the moment, the strength of the pain of paying is directly linked to the benefit associated to the purchase. When you buy something you know you'll end up using everyday for years on end, you feel less of the pain of paying, and maybe even thank yourself for the purchase, rather than the regret you might feel when you realize you have no use for that grand purchase you just bought.

Cash, Cards, and Digital

Debit cards, credit cards, cash, e-wallets, and bank transfers. The way that we pay for our purchases significantly affects our buying habits and the pain that we feel after a purchase.

"There's something schizophrenic about using credit cards" - Drazen Prelec, MIT

Studies show that paying for something using cash entails more pain than buying something using cards. The physical act of handing over cash to the cashier in the department store, and visibly seeing five bills left in your wallet instead of the initial ten triggers negative emotions much quicker than handing out a piece of plastic.

Meanwhile, the sense of loss when using cards and digital payments come much later, when you receive the balance to pay and assess the damage that has been done. Notice in movies involving shopaholics and big spenders that they usually pay for their grand purchases using credit cards and never cash. Or when you yourself spend more freely using cards rather than cash. Credit cards tend to disconnect our mental accounting system; enjoy now, feel the pang of pain later.

How Do I Use This Pain To My Benefit?

Now that we've talked about the pain of paying and the negative emotions that come with it, what's in it for us? Are there only negatives sides to this feeling?

The answer is no. While it's common knowledge that you should stick to the budget that's right for you and control your spending, understanding the psychology of the pain of paying can be used to your advantage.

Use the right mode of payment that will give you the best combination of pain and (eventual) happiness from spending less. For example, now that you know that one becomes more comfortable paying for something using a card, try to carry cash that you've allocated for that day instead. That way, you physically see what you're losing and become more cautious of throwing your money around throughout the day.

Going for a night out? Using your card might invite that unnecessarily big amounts of generosity where you say "No need to split the bill, I got this" too often. While cards are useful for big purchases that you want to split up the cost between months, or when you want to earn points points from your purchase, a big tip you can get when you're trying to save up is to cut on that plastic use. 💳

Feel the pain, and use it to your advantage.

Reducing the pain of paying by purchasing things in advance or paying in card leads to bigger, and more purchases that will have you questioning where your hard earned money went, so a little pain won't hurt at all. It might actually be advantageous on your end as it helps us save more for things that matter. Trust us, you'll thank yourself for the pain later. 💵