Encourage Customers to Budget Early

Early budgeting pushes you further away from this initial money, reducing the pain of paying from these funds.

Starting budget early in month for purchase later in month

Overview

Budgeting is good, right?

Not always. Sometimes it increases spending.

Why? Early budgeting separates you from this money. As you move further away from these funds, payments feel less painful. In one study, students spent more money on a class ring when they budgeted early (Chloe & Kan, 2021).

Perhaps hotels and rental car agencies should offer upgrades to customers who make reservations in advance. Or perhaps overly frugal customers should budget for a vacation farther in advance to reduce the pain of spending money.

Choe, Y., & Kan, C. (2021). Budget depreciation: when budgeting early increases spending. Journal of Consumer Research, 47(6), 937-958.