Rebuilding trust, reforming habits, rethinking tax compliance

IN today’s world, earning a steady income has become more varied and complex than ever before. Many of us no longer depend on a single steady paycheck.

- By Dr. Nadee Dissanayake

Instead, our income comes from a variety of sources whether it’s a full-time job, freelance work, rental income, investments, or side gigs like driving for ride-share services, tutoring, or selling handmade crafts online. While this diverse mix brings flexibility and new opportunities, it also adds layers of complexity especially when it comes to managing money and keeping up with tax payments.

What might surprise us is that people don’t usually delay or miss tax payments because they don’t want to pay. Often, it comes down to how they think about their money. There’s a natural habit, called mental accounting, where we divide our money into different “buckets” in our minds; some for daily expenses, some for fun, some for saving. Unfortunately, taxes often end up in the “maybe later” pile, or sometimes they’re forgotten altogether.

Understanding this can help us see why even responsible people struggle with tax deadlines and point the way to better solutions that make tax time less stressful for everyone.

What is mental accounting?

Pioneered by a Nobel-winning American economist, Richard Thaler, mental accounting describes how people mentally divide their money into separate “buckets” for different purposes like groceries, entertainment, rent, or emergencies. This natural habit helps us feel more in control of our finances but can also cause us to treat money differently depending on where it comes from or how we plan to use it. For instance, someone may treat their salary as “serious” money for bills, while freelance income feels like “bonus” money for fun or shopping. Crucially, taxes are often placed in a mental category labelled “later,” “not urgent,” or worse completely overlooked.