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Over-indebtedness and the interplay of factual and mental money management: An interview study

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  • Bernadette Kamleitner
  • Bianca Hornung
  • Erich Kirchler
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    Abstract

    Previous research has shown that money management contributes to over-indebtedness. This article sheds new light on this relation by looking at factual money management and its mental underpinnings, mental accounting. In a conceptual model we propose that fuzzy factual and mental money management practices aggravated by lack of congruency between factual and mental structures play an important role in over-indebtedness. Twenty-five in-depth interviews deliver preliminary support for this proposition. Successful financial control seems to build on efficient and inter-coordinated factual and mental money management. This reduces the willpower necessary for controlling financial behavior and helps to prevent and fight over-indebtedness.

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    File URL: http://webspace.qmul.ac.uk/pmartins/CGRWP34.pdf
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    Bibliographic Info

    Paper provided by Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research in its series Working Papers with number 34.

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    Date of creation: Apr 2010
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    Handle: RePEc:cgs:wpaper:34

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    Keywords: debt; money management; mental accounting; self-control;

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    Cited by:
    1. Antonides, Gerrit & Manon de Groot, I. & Fred van Raaij, W., 2011. "Mental budgeting and the management of household finance," Journal of Economic Psychology, Elsevier, Elsevier, vol. 32(4), pages 546-555, August.

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