Was thinking about the way I spend my money, and noticed how drastically I treat it depending on *how* exactly I come across it ;)
Money I get as gifts: Time to spend away!! And almost always towards *wants* vs needs and those things I’d never go out and buy for myself but deep down really want, haha… So basically – the best types of gifts anyone could give me :)
Money I get in winnings: Same as above, only not including the *costs* of attaining those winnings if any were incurred (like, say, money for lottery tickets or tickets for raffles/giveaways, etc).
Money I earn at the “job”: 100% for living and goals/dreams/retirement/etc :) Quite the difference from the above!! Haha… But why is that since it’s all still THE EXACT SAME MONEY at the end of the day??
Money I earn from “hustles”: Usually treated 80% like “job” money and 20% like “gift” money. Only I’ve recently realized that if I don’t SPEND that 20% “gift” money within a certain time period, my guilt starts creeping in real good and it eventually morphs into “job” money.
Trying to pinpoint the EXACT amount of time until that occurs, but so far I know it definitely happens after *one week* because I tried setting aside a good chunk from that old domain I sold last month, and by the time I was literally in front of the object I had earmarked it for I couldn’t bring myself to pull the trigger! Even though I really wanted it! However I’m pretty sure if I had gotten around to it within 24-48 hours of the money hitting my account I would have been all over it.
Interesting thing to figure out about yourself for sure, haha… And which could also be used as a trick against you if you ever wanted! ;)
Money I inherit: Similar to “job” money, only straight to the goals/dreams/retirement section and not allotted for “living” expenses at all… I once read somewhere in the blogosphere (Financial Samurai, maybe?) that out of all the money you receive, you should treat inheritances with the upmost respect since it honors your loved one who set it aside for you. And blowing through it would be one of the most disrespectful things you could do since they poured hours of their lives into *earning that money* which is now gone and literally sitting there in your hands.
Of course blowing through money is probably not any of our M.O.s anyways since we’re all here reading a finance blog right now, haha, but it’s never left my brain and now I make sure to spend *extra* attention and care to this money as if it’s the holy grail of it all. Even though again, money is still money at the end of the day!
What other types of money am I missing?
Money you get back in refunds/loans from people: 100% applied the same as “job” money. Right back into the pipeline and not treated at all as “free” money since it was all your money to begin with!
Money you get back in taxes (of course that was coming, haha…): Almost always towards maxing out retirement accounts. And if not retirement accounts, some other major priority that increases overall net worth.
Money you get from investments/dividends/etc: Straight back into the investment!! So those pennies keep compounding and making more penny babies!!!
Money you find on the street (which happens a lot to me actually – people just be throwing their money away!): Treated the same as “gift” money – towards anything my heart desires, which is usually coffee since I mainly only find pennies or dimes :)
(I did find a bag of cash once though in the middle of the parking lot which freaked me out!! I quickly put it in my pockets and drove off since there was literally no one – or car – around for at least 50 feet, but it didn’t stop me from envisioning some drug dealer chasing me or Candid Cameras stopping me down the road to interrogate me, haha… Fortunately I lived to tell the tale ;))
Okay, that’s probably enough examples for now, haha…
Point is – I seem to treat my money differently depending on how I get it, and pretty much any “expert” will tell you that’s the *opposite* of what you should be doing ;)
But hey – that’s just the way I’m wired! So sue me!
And honestly, it’s kinda refreshing to have some flexibility around this stuff since I tend to be so rigid with the “real” money I bring in (i.e. job money or investment money). Still, pros and cons to this stuff but it helps knowing at least how you operate in case you want to change it and/or enhance anything.
Anyways, thought I’d throw this out there and see where it goes…
If anyone wants to include me in their wills, you now know you don’t have to worry about me being a good steward of your hard earned money ;) Just sayin’…
UPDATE: I’ve since been told this idea of treating money differently is called “mental accounting” and is very common! Here’s a post I just wrote up on it, along with two other interesting iterations of it: More forms of mental accounting: the “endowment effect” and “nudge theory”
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!