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TPO 31 - Question 4
Using the examples from the professor's lecture, explain the concept of mental accounting.
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| 2016-08-03 | minaaminaa33 | 100.00 | Check this speaking |
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Mental accounting is a tendency to put money in different categories as if in different bank accounts. This will make it difficult for people to save money. The professor uses himself as an example to illustrate the concept. When he was a young man, he worked in an office and he got a regular salary. He also worked as a waiter and earned some money. At that time, he decided to buy a house. He saved all the money from office but used the money from being a waiter to buy videos and CDs or to eat out. So he treated the money differently. It turned out that it took him longer time to buy the house than it would if he saved both the money from working in the office and from working as a waiter.