Lucas is having trouble keeping his spending within his budget. He decides to cancel his credit card and cuts up his ATM card. Each week he goes to the bank and withdraws only the amount of cash he has budgeted for the week. If he needs more money, he will have to make an extra trip to the bank. This behavior is an example of:

Question

Quizplus · Accepted Answer

Lucas's behavior is an example of all the provided options: it increases the cost of overspending (a vice), acts as a commitment device to help him stick to his budget, and compensates for time-inconsistent decisions by imposing a structure that helps him align his short-term actions with his long-term financial goals.

Lucas Is Having Trouble Keeping His Spending Within His Budget