'Girl Math' in Personal Finance: Fun, But Don't Let It Fool You
In the age of social media and viral trends, even personal finance has found its way into the spotlight. The latest trend, known as 'girl math,' has been taking over TikTok, with young women sharing their humorous takes on money habits and spending choices that often defy logical reasoning. While it might be entertaining and relatable, it's essential to recognize that 'girl math' shouldn't be taken too seriously, especially when it comes to managing your finances effectively. In this blog post, we'll dive into the world of 'girl math' from a personal finance perspective and offer some insights into making smarter financial decisions.
The World of 'Girl Math': 'Girl math' is a term coined to describe the peculiar financial calculations that many people, not just women, engage in. These calculations often involve creative mental accounting and justifications for spending choices that might not make much sense when looked at objectively. For example, considering a purchase under $5 as practically free money or believing that buying something on sale is a money-saving tactic.
While these interpretations of 'girl math' can be humorous and relatable, they also serve as a reminder of how we often compartmentalize our financial decisions and justify our spending habits. It's a psychological phenomenon that transcends gender boundaries and speaks to the way we think about money.
The Psychology of 'Girl Math': Dan Egan, the vice president of behavioral finance and investing at Betterment, points out that 'girl math' is primarily a reflection of mental accounting, a facet of human psychology. Mental accounting involves dividing our money into separate mental accounts, leading us to act differently when it comes to spending or saving. Companies often leverage this psychological phenomenon to influence consumer behavior, such as offering store credit as a refund option to keep money on their books.
Egan suggests that not all aspects of 'girl math' should be a cause for concern. Sometimes, it's okay not to obsess over small purchases that won't significantly impact your long-term financial goals. However, he advises against spending excessive mental energy on trivial expenses. Instead, focus on the bigger financial decisions, like housing, healthcare costs, and income generation strategies.
The 'But' in 'Girl Math': While 'girl math' may provide a lighthearted perspective on everyday financial choices, it's crucial not to get carried away by the small stuff. Kia McCallister-Young, director of America Saves, suggests that while 'girl math' can be fun and entertaining, it highlights a tendency among people to think about money only in the present moment.
McCallister-Young emphasizes the importance of maintaining a clear view of your overall finances. While you can play mental games with your money, it's vital to address your past financial mistakes (debt), build an emergency fund for the present, and plan for future milestones (like retirement). 'Girl math' might be enjoyable to watch and relate to, but it should not distract you from responsible financial management.
'Girl math' on TikTok is undoubtedly entertaining and relatable, but it's essential to recognize it for what it is—a lighthearted take on our quirky financial behaviors. While some aspects of 'girl math' might not be harmful in moderation, it's crucial to maintain a balanced perspective on personal finance. Focus on the significant financial decisions, create a solid budget, and strive for financial literacy to ensure your financial future is secure. Remember, managing your money wisely is no laughing matter.