Economics · My Diary

Why sources of money affect how it’s spent


Alright, so why do people think the source of money should determine how the money is spent? I’m of the impression,  most people especially women think the fact that money is coming from some sources (like birthday gifts, money on the street,  like money from dad, or a tip) are “free monies” or “loose monies” that can be spent anyhow. In the course of finding answers,  I read something on Mental Accounting ( the household version of Financial Accounting).  It affects how people spend money and how they save or invest money. I bet you ladies will hardly use monies from guys they dont like for anything special in their lives.  Why does the source affect the usage? We,  Christians take it to another level,  most of us prefer to contribute monies we earn ourselves (salaries) at church than monies we get from others. It influences how people deal with losses and gains. 
Compartmentalizing income and spending into different mental accounts violates one of the basic rules of economics — that money is fungible, or interchangeable.


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