# Mental Accounting

*Behavioral Finance — Finicade finance glossary*

Mental accounting is treating money differently depending on where it came from or what it's labelled for, even though money is fungible. It's why people carry 19% credit card debt while holding a 0.5% savings account, and why a tax refund gets spent more freely than salary. It can be used deliberately: sinking funds and separate savings accounts exploit the same instinct in a useful direction.

**Also known as:** mental accounts, money buckets

**Related terms:** [Windfall](https://finicade.com/glossary/windfall), [Behavioral Biases](https://finicade.com/glossary/behavioral-biases), [Bucket Strategy](https://finicade.com/glossary/bucket-strategy), [Budget](https://finicade.com/glossary/budget), [Framing Effect](https://finicade.com/glossary/framing-effect)

**Taught in:** Mind Over Markets — Mental Accounting

Source: https://finicade.com/glossary/mental-accounting