Mental accounting affects financial choices from "summary" of Your Money and Your Brain by Jason Zweig
Mental accounting affects financial choices. It's like a filing system in your mind, where money is divided into different mental accounts based on where it came from or what it's intended for. This can lead to irrational decisions when it comes to spending and investing. For example, imagine you have $100 in your wallet. You might think of $50 as "fun money" to spend on a night out, while the other $50 is "savings" for a rainy day. But in reality, money is fungible - it's all the same, regardless of where it came from or what you intend to use it for. This mental accounting can lead...
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