What Mental Accounting Can Teach Us About Time Allocation

We often believe we’re using our time wisely but like money, time gets mentally labelled. And those labels quietly shape how we spend it, often in ways we don’t fully examine.

Nobel laureate Richard Thaler described this as mental accounting, the idea that we treat the same resource differently depending on how we categorise it.

We see this clearly with money. ₹1,000 received as a birthday gift might be spent freely, while the same ₹1,000 from a salary is saved or used more cautiously not because the amount is different, but because the source is.

The same lens applies to time.

We may not always allocate our hours by impact or intention, instead we often respond to how a task is framed in our minds. Just as we treat money differently depending on where it comes from, we treat time differently depending on how it’s categorised: urgent, admin, strategic, non-essential etc.

These mental labels shape behaviour more than we realise.

We might default to what’s visible or familiar, while deferring the less structured but often more valuable work.

Mental accounting is a cognitive bias, but used consciously, it can become a powerful mental model to reflect on how we spend limited resources.

A useful question to pause and ask:

→ If this hour were capital, would I deploy it the same way?

Time doesn’t show up on a balance sheet but how we spend it may be the clearest reflection of what we truly value.