Attitudes toward money

[calmloki]

So this morning Morningstar reports that we are up $55,000 from last week at this time. I know, I know - it comes and goes, ebbs and flows, the savvy ones just take a glance every month or so. We record daily, just as we've done with all rental and other Quicken enter-able incomes and expenses.

The funny thing is that we are stewing much more over a new credit card bonus/points plan that could bring in 5% of that amount - at optimal best. Money is fungible; I don't care what pocket it's in (or so I thought), but the stock ups and downs are kinda yawn inducing while working a card bonus scheme engages me. Maybe it's that stock prices rise and fall with no input from me while the card potential earnings are very dependent on what we do.

Anyone else find that money "from different pockets" is of greater or lesser importance?

 

[Lienlord]

Yes, I think the feeling you're somehow controlling the outcome makes it more engaging than just watching the market returns.
I recently started Forex trading with a small amount of $ and it's been very interesting and engaging.

 

[OldShooter]

... Anyone else find that money "from different pockets" is of greater or lesser importance?

Sure. We all do it to one degree or another. Richard Thaler calls it "mental accounting." https://en.wikipedia.org/wiki/Mental_accounting

Personally, I think it's useful to people. Separating fungible dollars into budget categories, for example. Separating daily operating cash from investment cash as you are doing.

It can lead to bad decisions, though, where one budget category has an unnecessary money balance that cannot be touched but the food account is empty. Rigid corporate budgeting is the poster child for this.

 

[Sojourner]

Anyone else find that money "from different pockets" is of greater or lesser importance?

Absolutely. Cash money that comes from a "3rd party pocket" (like a credit card signup bonus) is much more exciting and fulfilling than unrealized investment gains coming from my own "investment pocket". And even when my investments generate cash money (e.g., when dividends are paid), I still don't find that nearly as exciting as collecting easy money from 3rd party sources. I guess it has something to do with the psychology of "money I already have, or will have, or expect to have" vs. "found money".

 

[ivinsfan]

Sure. We all do it to one degree or another. Richard Thaler calls it "mental accounting." https://en.wikipedia.org/wiki/Mental_accounting

Personally, I think it's useful to people. Separating fungible dollars into budget categories, for example. Separating daily operating cash from investment cash as you are doing.

It can lead to bad decisions, though, where one budget category has an unnecessary money balance that cannot be touched but the food account is empty. Rigid corporate budgeting is the poster child for this.

Mental accounting can be good or bad depending on your personality. Some people overdo it either about money or sometimes about the people in their lives.



One thing I admire about my DH is that after 50 years of farming he is very very low key about mental accounting of all types. It has served him well.

 

[RobbieB]

I like my cash back bonus on my credit cards, but I love the returns on my equities.

 

[Car-Guy]

I value the money in my cash pockets about 20+% more than the money in my IRA and 401k pockets.

 

[Chuckanut]

So this morning Morningstar reports that we are up $55,000 from last week at this time. I know, I know - it comes and goes, ebbs and flows, the savvy ones just take a glance every month or so. We record daily, just as we've done with all rental and other Quicken enter-able incomes and expenses.

The funny thing is that we are stewing much more over a new credit card bonus/points plan that could bring in 5% of that amount - at optimal best. Money is fungible;
Anyone else find that money "from different pockets" is of greater or lesser importance?

I find bank and credit card bonus money more interesting for several reasons. One is that I have earned more money on bonuses and CC rewards than I have in interest on my savings. Granted that is not saying much in these days of 0.5% interest on many savings accounts and CDs.

 

[SnowballCamper]

I don't care what pocket it's in (or so I thought), but the stock ups and downs are kinda yawn inducing while working a card bonus scheme engages me.

Sounds to me like you recognize that the card bonus benefits are actual dollars credited to an account (assuming we're talking cash back benefits) where you have some control. The reported ticker prices of equities are just a number in time that you don't really have any control over. The act of selling converts it to money, irreversibly (in the sense that there is no opportunity to refund the purchase), and with uncertain future price if you change your mind to buy back.

 

[Sunset]

My stash is X which varies up and down with a general direction of up over the years...

But 3rd pocket money actually adds to my stash, even if that just means I spend less from my stash , so yes it's more exciting as without the 3rd pocket my stash is less.

 

[Aerides]

I commented similarly the other day. The market and my net worth don't seem as real and tangible as transactional money.

It's almost like another version of penny-wise-pound-foolish.

The markets can ripple every day and NW go 5 figures in either direction. Even after a good couple of weeks when we add another 6 figures, my reaction is little more than a ...Huh, nice. Probably because it doesn't seem as tangible or real?

But finding a $20 in a jeans pocket? Woo Hoo!

 

[CardsFan]

I value the money in my cash pockets about 20+% more than the money in my IRA and 401k pockets.

You are in TX. I need to add another 6% for state taxes.

 

[Souschef]

I like my cash back bonus on my credit cards, but I love the returns on my equities.

+100

 

[calmloki]

I commented similarly the other day. The market and my net worth don't seem as real and tangible as transactional money.

Sheesh - Sure looks like I high-graded your post! Didn't see it though, so maybe ... great minds?

 

[Skyward1]

It's hard for me to take $$ from a week or two of market movement seriously when I know it could all be wiped out in a day. Other money "pockets" seem more tangible because they're more stable. That being said times like the last week do tend to put a bit of a smile on my face, figuratively.

 

[RobbieB]

I guess I'm just agnostic as far as the pocket jingle goes.

I find an extra quarter million in my account end of month, I go buy a boat.

I find $20 in the laundry, nice, but won't even buy lunch at the sushi bar.

 

[calmloki]

I pick up a quarter on the street and am tickled because it is one of the newer state strikes.

 

[Time2]

I was reading a Q&A on Quora and there was a response from a plumber that said he works his tail of to earn his money, he has no debt and he has envelopes of $100 bills in boxes with a picture and he's very proud of that. People tried to tell him he needed to invest and he basically poo pooed that.
I told him the loss of value from 3% inflation over 20 years. And much more, but he was content with his safe built into the house and his gun.
I suggested he probably grew up without any modeling of financial matters, and he only knows what he knows.
Then I thought, so did I, but I figured it out.

 

[jazz4cash]

Money is fungible but markets gains are entirely different from cashback credit card rewards. Assuming you are buying things you would’ve bought anyway and using the rewards likewise they are durable gains. Market gains have to be given back sometimes, esp when you are recording daily.

 

[RobbieB]

I just look at the paper statement that comes in every month before I put it in the 3 ring binder.

 

[RetiredHappy]

I was reading a Q&A on Quora and there was a response from a plumber that said he works his tail of to earn his money, he has no debt and he has envelopes of $100 bills in boxes with a picture and he's very proud of that. People tried to tell him he needed to invest and he basically poo pooed that.
I told him the loss of value from 3% inflation over 20 years. And much more, but he was content with his safe built into the house and his gun.
I suggested he probably grew up without any modeling of financial matters, and he only knows what he knows.
Then I thought, so did I, but I figured it out.

This guy is also likely to be evading taxes and hence everything is kept as cash.

 

[kcowan]

I am in decumulation phase. So every couple of months it is what to sell. It has been fun these days when everything is so high. Although today was a downer everywhere.

 

[Badger]

I like my cash back bonus on my credit cards, but I love the returns on my equities.

+1


Cheers!

 

[Time2]

This guy is also likely to be evading taxes and hence everything is kept as cash.

Yes, I certainly had that thought and in one of his posts he said, "and I have tax returns" My response was something like, "oh, I thought you were hiding the money because you weren't paying taxes.

If I was Perry Mason, and he said, "and I have tax returns" I would have responded, your honor, that's non responsive. Then ask, "Did you you pay tax on all of your income?"

 

[DayDreaming]

Maybe slightly off topic but I've been thinking how relative it all is too. For example, I'm spending around $50k on a new car and paying an extra $1000 for a different color paint doesn't faze me at all. Yet when I go grocery shopping, I'll still carefully look, and will choose one brand over another to save me $0.25.