Carrying a 50-euro or 100-euro note in your wallet will help you save money. Ivana Pino reports for the news channel “CNBC”. According to Mary Gresham, an Atlanta psychologist, we think twice about breaking a big bill or not because we see it as “special” money.
Why we hesitate to spend the “special” money, according to Gresham, has to do with the fact that we value money differently. Behind this is a concept called “mental accounting”. It denotes the phenomenon that we make financial decisions based on associations we have with money – and they are not always rational. A study by the Journal of Consumer Research showed that it is more likely that you will spend your money faster if you have five 20-euro bills than if you carry a 100-euro bill with you.
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Most Germans still prefer cash to other means of payment. The last study by the Bundesbank from 2017 shows that 74 percent of Germans pay in cash and 88 percent want it to stay that way in the future. On average, everyone carries 107 euros in their wallet, but very few have a 100-euro note with them, but rather smaller bills.
Paying with cash can exacerbate the “pain of paying” and make you think twice about the transaction. It is different with card payment or payment by mobile phone: the more automatic it is, the easier it is to spend money. However, carrying large bills is not a safe way to save money, especially since companies are reluctant to accept them and your risk of loss increases if you lose your wallet or it is stolen.
This article was published by NewsABC.net in February 2020. It has now been reviewed and updated.