Mental accounting is a psychological framework that can be used to manage money. Mental accounting can be used physically by keeping seperate bank accounts, money jars, or mentally by thinking about the separate accounts. For example you may have one bank account but in your mind you plan to save 10% and the rest on incidental costs and bills.
Mental accounting also involves the opening of an account and closure and can help with money management as it is a form of self-control. You put money in and receive mental closure but spending it. You know how much is to go in a particular account and what for. It can also help you be aware of your finances as the money is contained in certain accounts.
Furthermore there are different schools of thought on how many accounts to hold your money. They range from three to six and include one for bills, one for holidays, one for an emergency, another for investment and another for giving to others such as charity. People use this practice to teach children about money management and for adults to improve self-control and manage debt. Mental accounting can also be used for investors or financial planners to compartmentalise money during diversification for an investment strategy such as placing money into Australian and international shares, property, cash and fixed interest, bonds and managed funds. It can also be used when investing in shares to assist with diversification further by splitting money into categories of a variety of companies such as utility, REITS, mining and healthcare.
Give mental accounting a go to help with money management and self-control.
Gambling addiction affects people of any gender and any age and in any socioeconomic status. Gambling is a behaviour that involves a decision to eventually win a prize after many attempts of spending money that may belong to the gambler or not.
Gambling can be a form of impaired decision-making and can also a result from a negative life experience. Gambling addiction is now known as gambling disorder in the Diagnostic and Statistical Manual, fifth edition (DSM-5) under the non-substance behavioural addiction section. Symptoms need to result in clinical impairment of distress within the following 12 month period and include four or more of the criteria listed in the manual. The criteria includes but not limited to lies to hid the problem, feeling restless when trying to cut gambling and needing to gamble to increase money or achieve a desired level of excitement.
Some people gamble to express their anger, have a negative relationship with money as they were told money was more important than them or want a sense of belonging. Risk factors also include a lack of family cohesion, loneliness, financial hardship and using gambling to mitigate it, impulsive personality where there is a lack of self control to manage the urge, high sensation-seeking behaviour, and a lack of coping strategies to manage life challenges. Therefore, there are many complex factors to consider when helping someone with gambling addiction.
Coping strategies to manage problem gambling include counselling to work through past trauma, experimenting with healthy coping strategies, improving financial literacy to learn about and appreciate healthy money management including planning for your financial future, improving relationships around you to develop a healthy sense of belonging, improving what money means for you as well as facing your problems and working it out.