You do not treat all money as interchangeable. The mind keeps separate accounts: savings, windfalls, “play money,” painful payments.
These mental accounts create meaning, but they also create distortion. A loss in one account can feel unacceptable even if the overall position is fine.
Reference points determine whether an outcome feels like a gain or a loss, and therefore whether it triggers relief or regret. Even small bookkeeping categories can shift behavior.
The fast system likes local stories: this bill, this bonus, this purchase. The slow system can compute totals, yet the emotional reaction stays local.
If you want cleaner financial choices, watch where you keep score. Ask whether the account is a useful commitment device—or just a way of making the same money feel different.