How Your Mobile Phone Makes You Spend More Money

Alevin Chan

Alevin Chan

Last updated 25 May, 2017

Mobile phones may provide unparalleled convenience, but they also cause Singaporeans to spend more money.

From making video calls to real-time stock trades to piloting a drone to deliver a last-minute bouquet, the limits of what our mobile phones can do seem to be shrinking day by day. We’re enjoying ever increasing convenience, but is this necessarily a good thing?

Well, it turns out that the convenience of using a mobile phone comes at a price: it's been linked to increased consumer spending. Not so surprising, if you consider the following 3 findings.

Using Screens Make You More Impulsive

The very act of using a mobile phone is enough to make you spend more money. We’re not being hyperbolic here; it seems that when it comes to making choices, the format we use affects our decisions.

Termed ‘online disinhibition’, this phenomenon was observed in a 4-year study that analysed over 160,000 online pizza orders. The result? Customers put in orders for more complicated pizzas, which had more toppings and more calories. And of course, they also cost more.

In another test involving financial literacy, it was found that participants performed worse on an online test, than those taking the same test on pen and paper. Shlomo Bernatzi, who co-authored the test, theorised that we “might think and act faster in front of screens, which leads to a greater reliance on instinctive responses that are often incorrect.”

All these mean that when using our mobile phones to carry out a transaction, we tend to become more impulsive.

Apps Are Designed To Make You Spend

The whole point of using a smartphone is so we can have the world literally at our fingertips. And it is this unparalleled access that puts our wallets in danger.

Service providers and merchants know that in e-commerce today, speed and convenience is the name of the game. Notice how painstakingly they have crafted their apps to deliver just that to you.

Every time you tap a few buttons to get a ride, order a hamburger and fries, or household goods and groceries, you’re forming a feedback loop between your action (of using the app) and the result (getting what you need).

Because feedback loops become stronger and more entrenched each time they are repeated, that’s how you end up with the habit of Grab-ing a ride everywhere you go, or McDeliver-ing each time you get the midnight munchies.

Which would be fine, if these habits didn’t cause you to also spend more!

Mobile Payments Make It Even Easier To Spend

If you’re having trouble controlling your spending with credit cards, brace yourself for mobile payments, which promise to make it even easier to part with your money.

Credit cards have long been a prime suspect in overspending, with a 2012 study showing MBA student being willing to spend up to 100% more on a valuable item - provided they could put the purchase on credit. (This was the most startling finding yet, with previous estimates pegging increased spending of between 12% and 18% when buying on credit.)

This study (and others) seem to indicate that the method of payment affects our buying behaviours. And with mobile payments promising enhanced versatility and convenience, researchers fear shoppers will only spend more.

Why is this so? The simple explanation is that credit cards and (to a greater extent) mobile payments removes us from the pain of spending money. Explained Ross Steinman, chairman and associate professor in the psychology department at Widener University, "If you're actually handing over physical cash, you can reflect on what it took to get that cash.”

On the other hand, conducting financial transactions over non-traditional platforms (a series of taps versus pulling out dollar notes from your wallet) has the effect of diverting your attention away from “the pain of paying”.

Apparently, mobile payments are so effective at doing so that mobile payment users have been shown to spend twice as much.

How You Can Stay In Control

If you’re having a hard time controlling your spending, stick with cash. Work out how much you can afford to spend, put only that amount in your wallet, and practice, practice, practice until you can comfortably stay within budget.

Another way to stay in control is to use loyalty programmes and rewards points to offset your spending and keep within budget. Note, however, that this will only work if you’re highly disciplined, as rewards programmes are designed to encourage you to spend more.

Here, credit cards can be a useful ally. First, work out what you are spending the most money on - be it restaurant dining, online shopping or everyday household bills. Then, find a credit card that gives you the best rewards on the bulk of your expenses.

Once you match your spending to the right credit card, you’ll be well on your way to lowering your overall expenses. You can use’s free comparison tool to easily find the best credit cards for you in seconds!

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Alevin ChanBy Alevin Chan

A Certified Financial Planner with a curiosity about what makes people tick, Alevin's mission is to help readers understand the psychology of money. He's also on an ongoing quest to optimise happiness and enjoyment in his life.

An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.


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