Dirty Money Makes You Spend More
November 14, 2012

To Save Money Keep Only Brand New Bills In Your Wallet

Alan McStravick for redOrbit.com - Your Universe Online

At a time when the average American family has a savings account balance of only $3800, we are all trying to find ways to keep a little more cash in the bank and in our pockets. Even banks are getting in on the act. Some are offering programs that build your savings pennies at a time by rounding up your debit card purchases to the next dollar and taking that extra change out of your checking account and transferring it to your savings account. But what can you do to proactively keep more cash in your pocket? The answer may surprise you.

Researchers in Canada are asking whether or not the physical appearance of money might matter more than we think. In their study, they have found that an individual will spend more often if their pocketbook contains worn bills. They claim this is because a worn bill evokes feelings of disgust and also has certain social implications. If you carry a ripped, dirty or worn bill, you feel somehow inadequate and will try to spend it more quickly. So the trick to saving more money is to fill your wallet with crisp new currency. Their study is published online and will be published in the April 2013 Journal of Consumer Research.

"The physical appearance of money can alter spending behavior. Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others," write authors Fabrizio Di Muro of the University of Winnipeg and Theodore J. Noseworthy of University of Guelph.

As a commodity, money is intended to be interchangeable. For example, if you lend your best friend a $5 bill, then you shouldn´t care if they pay you back with the same $5 bill a week later or even five $1 bills. By comparison, other commodities like diamonds, real estate or art wouldn´t be as suitable as currency. But what we have learned from this study is that money may not be, in fact, as interchangeable as we once would have thought.

The researchers conducted a series of studies where they gave consumers either crisp or worn bills. They then asked these consumers to complete a series of tasks that were related to shopping. What they found was that those that were given the worn bills tended to spend more than those who received the crisp bills. Additionally, individuals with worn bills were more likely to break it rather than pay with an exact amount of crisp bills in lower denominations.

In an interesting turn of events, the same consumers, when they thought they were being socially monitored, preferred to spend the crisp bills rather than those that were worn.

The researchers also tested the previously studied finding that individuals will spend more easily an equivalent amount of smaller denomination bills, such as four $5 bills, rather than spend the larger single denomination bill of $20. The authors were able to determine that this doesn´t always hold true. In their findings, they determined that the physical appearance of the money could enhance, attenuate or even reverse this previously proven effect.

"Money may be as much a vehicle for social utility as it is for economic utility. We tend to regard currency as a means to consumption and not as a product itself, but money is actually subject to the same inferences and biases as the products it can buy," the authors conclude.