Research in mental accounting finds support for a number of interesting effects that are both static and dynamic in nature. In the present paper, we focus on one specific dynamic effect (i.e. an effect in which past decisions by the consumer impact a future decision) of mental accounting—the effect of prior spending on future spending. In their research on mental budgeting, Heath and Soll (1996) proposed that consumers mentally allocate (i.e. budget) their money to a number of spending categories (like food, entertainment and clothing). They track and record cumulative expenditures within each spending category, and their purchase behavior at any time is driven by the money available in each category (Heath and Soll 1996; Heath 1995). Therefore, the likelihood of incurring a given expense is inversely related to the size of prior spending in that particular category.