This week, I was reading TODAY and stumbled upon an article about spending characteristics with cash. The Journal of Consumer Research‘s study was called “Money Isn’t Everything, but It Helps If It Doesn’t Looked Used.” The purpose was to see if consumer spending habits changed when using crisp, new bills rather than dirty, torn, “grubby” bills, according to TODAY.
It turns out that yes, it does make a difference. In the experiment, they gave students money and asked them to go shopping. Some were given old bills, and the others were given new bills. They learned that those with worn bills tended to spend more and, “They were also more likely to break a larger bill that was old rather than pay the exact amount in new bills of lower denomination.”
Even more interesting: When the subjects knew they were being watched, they flip-flopped and tended to spend the new bills first. TODAY quotes the authors of the study: “Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others.”
I’ve noticed how new and old bills have such a different feel to them, but I’ve never thought further than that. The authors add, “We tend to regard currency as a means of consumption and not as a product itself, but money is actually subject to the same inferences and biases as the products it can buy.”
What I want to know is how credit cards and debit cards fit into this. I thought spending habits were all about cash versus plastic, but now it looks like there are subtleties in cash spending alone. If someone has a small amount of cash and a credit or debit card in their wallet, would their decision to use one over the other factor in the status of the bills, or would they pay with cash either way if that is their preference? Interesting things to ponder, especially since people don’t seem to realize they have this tendency.
Keep on reading for my roundup of my favorite posts from the personal finance blogosphere this week.
1. Money Smart Life lists five common characteristics often found in people who get out of debt.
2. PT Money shares many technology tools you can use to score the best deals and go bargain hunting on Black Friday.
3. Money Crashers reveals four “commitment devices” you can use to help you create and achieve your financial goals.
4. Money Q&A discusses several different strategies for budgeting, including balancing your budget with a credit card.
5. A guest poster on Newlyweds on a Budget explains how she and her husband managed to pay off $50,000 in debt in only two years.
6. Enemy of Debt discusses why there’s no magic fix for getting out of debt and suggests small steps you can take to succeed.
7. You may be tempted to go to outlet malls to get your holiday gifts, but Give Me Back My Five Bucks explains why you’re not saving as much money as you think.
8. Mr. & Mrs. Not Made of Money suggest ways to maximize your family finances and make your money go as far as possible.
9. Budgeting in the Fun Stuff discusses how you can graduate college without debt. Unsurprisingly, one of her pointers is to be smart with credit cards!