Thenbsp; different values we as people put on the same amount of money based on subjective or emotional criteria is our personal mental accounting.nbsp; This type of accounting may seem useful or in the very least harmless but it is simply bad for us.
Mental Accounting has been studied and popularised by behavioral economist Richard Thaler. He says that we tend to lsquo;mentally classifyrsquo; money even though money is just money (i.e. its fungible), leading to both irrational spending and irrational investments.nbsp;
For most of us, money received unexpectedly is always considered more spendable or put in the lsquo;can afford to riskrsquo; category.nbsp; In reality, money categorised as lsquo;can afford to riskrsquo; and money categorised otherwise/for safekeeping/monthly budget, etc. should be treated with the same diligence.