Erika Jones, CFO, CCTAProfit First Professionals · Certified Fractional CFO and Profit First Professional

Taxes - It's almost time. Are you ready? #taxes #accounting #money #moneymanagement #moneyhabits

25 Feb 2026 · 1 min

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In this short video, Erika Jones explains why paying taxes feels especially painful by invoking the behavioral economics concept of loss aversion. She walks through three imagined scenarios: receiving $100 outright, receiving $100 and then having $40 taken away as tax, and simply receiving $60. Although the net outcome of the second and third scenarios is identical, the experience of having money taken away creates a stronger negative emotional response. Jones argues that this psychological reaction can be mitigated in both personal and business finances by allocating the expected tax liability to a separate account as soon as income arrives, so that when the government collects the tax it feels less like a loss and more like a planned transfer.

Chapters

Taxes are painful, and the reason is because of a psychology called loss aversion. Imagine you came here to the office and I saw you and said, hey, here's 100 bucks. Good to see you. Maybe a little awkward, but it would feel great to receive 100 bucks. Now imagine a second scenario where I see you say, hey, good to see you. Here's a hundred bucks. Oh, give me 40 bucks back in taxes. Now, it's painful because you just received $100, which was kind of awkward, but great, and now I'm taking money back. This is really odd. And, gosh, I had 100. Now I only have 60. Imagine the third scenario where I see you and say, hey, good to see you. Here's 60 bucks. Not taking anything away. You're getting 60 bucks. We know logically scenario two and scenario three are identical, but there was nothing taken away with our taxes. It's when the money's taken from us that we feel the pain. So in your business and your personal life, when money flows in and you're going to have a future tax responsibility, first allocate that money out to a separate account before you see it. And now when the government takes it, it's not as painful.