Hidden Brain

Money 2.0: Why We Bust Our Budgets

May 9, 2022
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ANECDOTE

King-Sized Bedspread

  • Richard Thaler's friend bought a king-size bedspread for her double bed because it was the best deal.
  • The bedspread was too big, but she saved money.
INSIGHT

Non-Recurring Expenses

  • Recurring expenses are predictable, but one-time expenses happen often.
  • These seemingly one-off expenses are frequently miscategorized in budgets.
INSIGHT

Overspending Justification

  • We justify overspending on infrequent expenses because they feel exceptional.
  • The infrequency makes it hard to understand their real budget impact.
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