Can budgeting make you spend more? Study says yes

Can budgeting make you spend more? Study says yes

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Throw out what you think you know about budgeting.  A new study says budgets can backfire, and the FOX 5 I-Team's Dana Fowle says you might spend too much money when you budget.  

If you're confused, you should be.  Even the researchers were left scratching their heads, so they ran their test six times to be sure they were right.  The study says setting a price limit on single, big-ticket items like a refrigerator or a TV will backfire.  For instance, if you set a $1,000 budget on a refrigerator, but at the store, you look in a range from $900-$1,200, you'll likely go with a pricier model that has more features.  

Ryan Hamilton of Emory University was one of the researchers.  He says it's a mind game you play with yourself.  

"If you say that I don't want to spend any more than $100 on this purchase, you'll probably save more than if you hadn't decided that before you went into the store," Hamilton explained.  "So, it's the setting a limit or of a range or of a boundary of some kind that pushes up you towards the limits of that boundary, and will probably make you spend more than you would have."

Hamilton says we end up spending not just a little more, but 50 percent more.  He says if you make a list of the features you have to have and then go to the store, you will float down to lower price points.
   

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