I’ll be talking about money and happiness live tonight on Wisconsin Public Radio’s “At Issue with Ben Merens” from 5 to 6pm CST/6 to 7 pm EST.

This week’s Yahoo!Finance column looks at the trend in tracking and analyzing personal behavior, with, of course, a focus on spending and saving. I report on new research that examines characteristics and motivations shared by people who plan ahead and track their spending.

One study I had hoped to include didn’t fit the column length, so I’m featuring it here. Researchers from Georgia Institute of Technology, Cornell University and Maastricht University examined the tracking habits of grocery shoppers in two Atlanta stores, one in a middle-income neighborhood and one in area with a 36 percent poverty rate, in February 2009.

Some 90 percent of low-income participants indicated that they track their spending as they shop, with 35 percent using hand-held calculators; for middle-income shoppers, the numbers were 80 percent and 17 percent respectively, according to the study, published in the Journal of Marketing in March.

“Even though people say groceries are not a big part of the budget – 12 to 13 percent on average — among low-income people that percentage goes up very quickly,” says co-author Koert van Ittersum, Georgia Tech associate marketing professor. “When it becomes critical to keep track of spending, people become innovative and find a way to do it.”

Interestingly, the study also reinforced the necessity of real data – especially for people on tight budgets. Researchers found that people most motivated to save money are most likely to mess up their mental tracking. Here’s how they figured that out: In the lab, one group of participants was promised a cash reward, with the amount dependent on how accurately they determined the cost of 19 grocery items flashed on a screen. A second group was asked to estimate the grocery bill with no reward.

The cash-motivated group would start by trying to add exact numbers in their heads and give up after the third or fourth item, Ittersum explains. “In the end budget shoppers are more likely to overspend. As a result of trying so hard, they messed up, and their final estimate turned out to be worse than people casually asked to estimate the price of the items,” he says. “Humans are not wired to process three-digit numbers on 19 products — we can’t pull it off. If you need to be accurate because you can’t overspend, bringing a calculator is the best way to do that.

“Information is power and the more you know, the more you can make more informed decisions,” he contiues. “Depending on how important those decisions are, it might be important to track certain behaviors.”

I would argument is that as long as the tools and analysis are so readily available, everyone should track their spending, because small decisions snowball into life-changing scenarios over time. “Not many people end up in debt overnight — it’s accumulation of many small decisions that end up causing a whole lot of trouble,” says Ittersum.

In my Yahoo!Finance column that posts on May 15, I discuss the concept of mental accounting – the way people separate different pools of money in their heads in ways that are both rational and irrational. For instance, you wouldn’t withdraw funds from your child’s 529 college savings plan to pay for orthodontia, because you’d pay that out of “current assets” rather than “future assets.” 

It’s worth noting that the use of credit cards tends to obliterate good mental accounting. Behavioral economists find people pay less attention when purchases are “decoupled” from payment.  

Let’s say you buy a $50 jacket on a credit card. “Compare the impact of paying $50 in cash at the store to that of adding a $50 item to an $843 bill,” writes Richard Thaler, professor of behavioral science and economics at the University of Chicago business school. “Psychophysics implies that the $50 will appear larger by itself than in the context of a much larger bill, and in addition when the bill contains many items each one will lose salience. The effect becomes even stronger if the bill is not paid in full immediately.” 

One study found that college students leaving the campus bookstore who paid cash more accurately recalled the price they paid than students who used credit cards. A separate study found graduate students who were allowed to bid on items in an auction with a credit card bid up to 100 percent more than those restricted to cash payment. So if you’re having trouble reining in your spending, cut up the cards and pay cash.