The Unconventional Psychology Of Indulgence

Here’s something I’ve always wondered: Why would anyone pay for a GV Gold Class ticket?

I mean, sure, it has a lounge, some F&B – which you have to pay for – and a nicer seat, but would you actually pay 40 bucks for that? I probably wouldn’t.

(Does anyone know if Golden Village actually makes money with these things? Or are their only customers hormone-charged 15 year-olds wanting to impress their dates?)

Now, let’s say that you won a $100 Golden Village gift card. Would you rather spend it on:

• Option A: 4 pairs of regular movie tickets; or
• Option B: 1 pair of Gold Class movie tickets?

Rational economists will be like, “Of COURSE you should go for Option A! You don’t even need Gold Class, but you could use it to watch several movies (like Captain America Civil War, X-Men Apocalypse, and Suicide Squad omgomg), so therefore Option A makes more sense.”

Hmm, really? Let’s think about this for a second.

Could It Be Rational To Spend “Irrationally”?

Now, let me be clear: I don’t advocate blind indulgence. Seeing people go into debt for 65-inch TVs and luxury vacations they can’t afford makes me want to scald myself with a pot of steaming hot milo. I’ve written before about how smart people may splurge on the things they love, but they also cut costs on everything else.

But human beings are funny creatures. If we get “free” money like a prize, miles or a gift card, we’re more likely to spend it, as opposed to money we’ve earned. This is a psychological trait known as mental accounting.

Personal finance bloggers will tell you to guard against this. Sell off your gift cards, make sure you convert them to cash, and you’ll be better off financially.

I disagree. I think that we should EMBRACE mental accounting to get experiences we would otherwise never have paid for.

For example, my fiancee and I won a Nespresso coffee machine a couple of months ago. Our first thought was, “LET’S SELL IT ON CAROUSELL!” After all, we could use the extra cash for our wedding and renovation.

And then we stopped and said, “Wait a minute. We would NEVER pay for a Nespresso machine. Why don’t we just enjoy it, now that we have it?”

And so we did. We kept the machine and the coffee capsules that came with it. And I’m looking forward to making myself a nice cup of actaboutit atas coffee in the mornings to keep me company as I write my blogposts.

Switching Spending Strategies For the Ultimate Indulgence

But let’s think bigger: Let’s talk about one of the most luxurious experiences you could ever have: Flying First or Business Class.

In my Dream Trip survey, SO MANY of you cited First and Business Class as part of your ultimate dream trip.

• Flying Business/First Class with Singapore Airlines to Japan and propose to her up in the air
• Flying the Singapore Airlines Suites to Japan, dining in the top sushi joints in Japan, soaking in an onsen overlooking Mt Fuji
• Flying Singapore Airlines on Business Class (yes, i m easy satisfied) to Brazil and start my south american 6 months flashback tour
• A RTW trip (which should include flying SIA Suites to/from New York as one leg!).
• Flying to Spain in SIA First Class, sitting by the Mediterranean beach, enjoying tapas and pina colada in the cool evening.
• Fly Business Class to Hokkaido via Tokyo (I’m realistic – First Class is probably too snooty for me).

Now, most people I know would never fork out their own money to fly Business Class – even if they fly it regularly for work! At fares 3X – 5X the cost of an Economy Class ticket, it’s pretty hard to justify paying for Business Class yourself.

But what if you could get it for almost free using a mileage credit card?

Up till last year, I’d been putting my spending on rebate cards. These were great – I automatically got several hundred dollars in rebates every year. But these savings were instantly forgettable – no one tells their kids, “Son, one day, if you spend really smart, you could get $800 in rebates a year!!!”

On the other hand, a Business Class flight is part of your DREAM TRIP – how’s that for a story to tell?

That’s why I switched my spending exclusively to mileage cards. Sure, I might be forgoing the extra cash from the rebates, but there are some experiences that are worth the opportunity cost.

At the end of the day, let’s acknowledge that we’re not rational robots who maximise our utility for every single transaction. While you shouldn’t spend blindly to indulge (I’m looking at you, #YOLO millennials), don’t feel guilty for enjoying a premium experience even if it’s not the “optimal” decision.

Now, I’m curious to hear from you: If you got that Gold Class ticket, that Nespresso machine, that Business Class flight – would you indulge, or sell it off?

Let me know in the comments below or by sending me an email.

P.S: Thanks for all the birthday wishes and suggestions from last week’s post! SO MUCH LOVE <3

Image credits: here, here,