Found Money Syndrome

Because I’m sick of Canada’s cold winter, I recently got into a plane and flew to Las Vegas. Once I arrived, there was the bonus of eating large amounts of food at the buffets, which I did with gusto. Plus it was warm, which was also an important part of this trip.

And yes, I gambled. (Gasp! Personal finance sin!) As I sat at the poker table, I watched one particular player’s unorthodox strategy. Whenever he was making money, he played significantly more aggressive. He’d be involved in more hands, and he’d bet fairly aggressively whenever he sensed weakness in another player.

After a few losing hands, his stack had dwindled to below his original $100 buy-in. Maybe his cards just turned cold, but his play turned incredibly passive. He only played in select hands, and even then he picked his spots carefully. It was a complete reversal compared to before.

Again, I have no idea what his cards were like, but I suspect they didn’t have as much to do about his play as his mental state. He was suffering from found money syndrome.

Whenever people get money easily, they treat it entirely different than money they worked for. They gamble with it at places like an online casino, or decide to use it to treat themselves, or do something else similar to squander it. You probably have, I know I have. Why is this? Why do we separate our money out like this?

I think it’s because found money is unexpected, and for people unexpected money is money that isn’t as important as expected money. If you exchange hard work for money, that cash represents something. It represents the sacrifice of exchanging something tangible for money. Found money doesn’t have these feelings associated with it, so we treat it differently.

A perfect example of this are tax refunds. As someone who always owes each April, it always amuses me when I hear everyone else file their taxes with the enthusiasm of a Sustainable PF recycling run. They want their refund, darn it, and they want it now. I’d argue it’s probably more effective to not give the government an interest free loan, but that’s just me. I realize I’m fighting a losing battle when it comes to tax refunds.

So people get their tax refund, and what do they do with it? They buy stuff, of course. Wal-Mart recently reported weak sales in the first part of February because the IRS was delayed in sending out tax refunds. Most people spend their refunds frivolously. Sure, you wouldn’t go blow your whole tax refund on a big TV and a new laptop, but I bet you still put some of it aside to have some fun with. Why? Because it’s free money, and that’s somehow different than money you worked for, even though a tax refund is actually money that you worked for, albeit a while ago.

On the other hand, none of this really matters if you’re ultimately making smart decisions with your money. If you were going to buy a TV anyway, it doesn’t really matter whether the cash comes from your tax refund or from your side hustle – it’s still money that you could have saved or invested. Maybe it’s time to look at your finances that way, and treat all money as equally important.

It doesn’t matter what source your money comes from, all that matters is that you’re making smart decisions with it. If you can make smart decisions with unexpected money, you’ll be that much farther ahead. So go ahead and put that found $20 bill towards groceries this month. Or, better yet, give it to me. I’ll spend it on something smart.

2 comments to Found Money Syndrome

  • Jenny @ Frugal Guru Guide

    And when found money is taxed at a “side hustle” rate and you spend it all without saving for taxes, things get nasty FAST! I’ve seen several people get into trouble that way.

  • Connor Harley

    I am totally guilty with that found money syndrome. I am quite a frugal person on the money I worked hard for, but most often when I receive an unexpected money, I tend to spend it lavishly to treat myself for a good meal or a salon trip.

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