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? Many people will not bother to take the effort to save the $5 on the first scenario, and yet many will in the second scenario despite the savings being exactly the same amount. While it is easy to pass the above “test” – one could perhaps have answered similarly to both scenarios – reality is a lot trickier. We rationalise extravagances such ......