Why?

Why do we treat money differently depending on its source? A dollar is a dollar after all. I heard a story yesterday in my nail salon, the technician had a client text her to say she had won $1000. Forty minutes later another text arrived reporting on the loss. It reminded me of an apocryphal tale which does the rounds in that gambling capital Las Vegas.

The legend of the man in the green bathrobe.

By the third day of their honeymoon in Las Vegas the newlyweds had lost their $1,000 gambling allowance. That night the groom noticed a glowing object on the dresser. Upon closer inspection he realised it was a $5 chip they had saved as a souvenir. The number 17 was flashing on the chip’s face. Taking this as an omen, he put on his green bathrobe and rushed down to the roulette table where, not surprisingly, he bet on number 17. He let his winnings ride and eventually he was worth $7.5 million. Unfortunately the floor manager intervened, claiming the casino didn’t have the money to pay should 17 win again. Not to be deterred, the groom caught a taxi to another casino where he bet all on 17 again, when it hit it was worth $262 million. Needless to say, with such luck he bet again, only to lose it all when the ball fell on 18. Broke and dejected, the groom walked the several miles back to his hotel. ‘Where were you?’ asked his wife. ‘Playing roulette!’ he replied. ‘How did you do?’ ‘Not bad, I lost $5.’The groom felt that his winnings were not real money, and so the losses were not real losses. This tale told in some parts of Nevada as gospel truth demonstrates one of the most common and costly money mistakes: our tendency to value some dollars less than others and to waste them. After people have experienced a gain or a profit they are willing to take more risks. Gamblers refer to this feeling as playing with the house money.

How do you treat your money?