Five illusions created by mental accounting
Summary of Lee Ji-young, 'Mental Accounting' (SallimBiz, 2012)
01
Income illusion
Remembering the total annual salary before taxes and 4 major social insurance premiums as my income
02
Savings illusion
Maintaining low-interest savings accounts while carrying high-interest credit card debt
03
Consumption illusion
Rationalizing spending based on transaction utility from card benefits and sale phrases
04
Asset illusion
Mistaking a residential home for a liquid asset, leading to becoming 'house poor'
05
Debt illusion
Remembering only the loan principal as debt and treating interest separately