Why Spending Money Hurts and How to Stop the Pain (2024)

Key points

• Spending money can cause emotional pain.
• Certain features of payment can make it feel more or less painful.
• Tactics to minimize pain of payment include paying in advance and paying with a credit card.

We have all experienced it at some point or another. We get our car towed and feel pain when paying the charges to get the car out of the lot. Buying concert tickets to see a band we love and then our face turning blue with anger once the website slaps on hefty fees. This unpleasant feeling that we all experience when spending our hard-earned money (especially on unpleasant costs), is so universal that psychologists have created a label for it: Pain of payment.

Pain of payment is an intuitive concept you probably related to when you first heard the term. Money is a universally valuable tool, and we can’t help but experience a bit of emotional pain when we part ways with our money. The concept is more than folklore, and neuroscience research has shown that pain of payment activates brain areas associated with feelings of disgust and pain. When spending money, we sometimes have to decide whether the pleasure we will experience from that vacation to Cancún will outweigh the pain associated with purchasing the vacation.

Now that we’re familiar with the concept of pain of payment, here are a few strategies you can use to minimize pain of payment when spending your money (or even turn the pain into pleasure).

1. Don’t pay with cash. Research on pain of payment shows that certain methods of payment tend to be more painful than others. The most pain-provoking payment method when it comes to spending money is paying via cash. When you pull out your wallet and hand over a $20 bill, you can literally see the money disappearing right before your eyes. Although the pandemic and the rise of online retail have created a cultural shift away from cash, it is still worth noting that the research finds paying with cash as significantly more painful compared to paying via credit card.
2. Pay now, enjoy later. One of the best strategies for reducing pain of payment is to make purchases upfront and then enjoy the purchase “for free” at a later point in time. When the experience is directly tied to payment, it causes negative emotions. Picture the annoying meter running in a taxi, increasing the rate every 30 seconds and stealing your attention rather than looking out the window and enjoying the ride. For instance, if you’re planning a romantic getaway with your lover to Cancún, the way to maximize the enjoyment you’ll get from spending the money is to book the trip in advance (several months). While the upfront cost may cause some pain, you will be able to look forward to the trip for the months leading up to it and can fully enjoy your purchase with the cost being out of sight, out of mind once you arrive on the sandy beach.
3. Bundle your purchases. Speaking to the pay now and enjoy later advice with the vacation example from above, the single best tip here is going to be purchase all-inclusive vacations and packages when possible. This strategy also creates some pain-of-payment upfront, but once you arrive in Cancún you can reap the happiness benefits of everything you eat and drink for “free”. And is there anything better than a free margarita on the beach? The joy of buying in bundles and in bulk also explains why Costco has a cult-like following and many people feel happy and as if they are saving money when they shop at Costco or buy in bulk.

Spending money is an inevitable part of our lives in modern society, and it can cause us to feel pain. In this case, knowledge can be power. Don’t beat yourself up when you feel negative emotions when spending money because it is a universal phenomenon, and you are not alone. By understanding how pain of payment works, you can start to make your purchases work for you and get more emotional bang for your buck when spending money. Now go book that all-inclusive trip to Cancún for two months from now on your credit card.