Lately I’m becoming an expert on the psychology of spending money, and it’s all thanks to my trusty radio.
Last month I wrote about a story I heard on NPR which said that we can save money by carrying big bills. Earlier this week I heard another story which goes hand-in-hand with the big bill story. According to this story, not only will we hold onto a $100 longer than five $20’s, but we’ll also keep a $1 longer than we will 4 quarters.
They talked about a couple of studies which show that people will spend coins faster than bills. The studies were interesting, and they got me thinking back to my days at an office job. Back then, if I had change in my pocket, I’d probably pay a visit to the vending machine. But I’d hardly break a $1 for the same snacky goodness.
The lady went on to say that if the Obama Administration wanted to stimulate the economy they should increase circulation of $1 coins and introduce a $2 coin.
That comment reminded me a story I heard the previous day on NPR, on how the opposite is actually happening.
The US Mint is producing 70% fewer coins this year compared to last year.
They said that a key factor in the reduction was the economic slowdown.
“The Mint’s mission is primarily to make coins to fulfill the demands of commerce,” says Ed Moy, director of the Mint. “The demands of commerce haven’t been doing too well the past six months.
They also mentioned that more people have been saving coins and turning them back into the bank.
“So in addition to low economic activity, there’s an increased number of coins coming back into the banking system, which means that the banks need less coins from the Mint,” says Moy.
So while the penny is not being retired, there will be less of them floating around. In fact collectors are grabbing up. According to the story a 50-cent roll of Lincoln Bicentennial pennies is selling on eBay for up to $10.
Yet another head scratching moment.
So how do you handle coins? Do you spend them as soon as you get them, do you roll them up and put them in the bank, or do you scour ebay and look for coins to add to you collection?
Until next time,
PS The piece of info I found most interesting in these stories was the fact that the U.S. Mint funds its own operations through sales of collectible and bullion coins. Last year it made a $750 million profit for the U.S. Treasury.