Can You Afford It? How Mental Accounting Affects Proper Judgment
Most people, if not everyone, use mental accounting on a daily basis when it comes to financial decisions. A common example would be the way a person more readily spends his year-end bonus.
Take one more example: If you were going to spend $100 on an item and realised there was a cheaper source 15 minutes away selling it for $95, would you take the effort to obtain it from the cheaper source? What if the item was $10, and the other place was selling it for $5?
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Perceived Cost vs Actual Price of Insurance
IM$avvy carried an article from The Business Times – What turns off Gen X and Gen Y on life insurance – which talks about the reasons why few Singaporeans aged between 20 to 40 wish to purchase insurance.
As stated by the article, a survey found out that most people are put off by insurance because of the high price tag they perceive insurance to carry.