Money is always money whether it is cash, coin, or a number in your bank account. But have you noticed how we tend to view money differently via the source in which it is earned? I touched on this a little bit on the latest lesson of my podcast, but I was thinking about this the other day when I was daydreaming about what my family could do with a sum of money that we had recently come into. It was then that I realized that I viewed this money differently from my regular earned income. While pondering this some more I realized that I tend to view money differently depending on how it was acquired.
For example, I view our income as the money we use to pay for our standard of living. My family uses it to pay our necessities each month such as food and shelter. We use it to make our mortgage payment and pay our insurance premiums. We also use that money to give and invest off the top, before the money even hits our bank account. We also do a little savings with the money as well.
But our tax refund? For some reason I view that as money to be spent. Now yes, I don’t recommend getting a tax refund, but in our current financial situation the way the IRS does tax withholdings it makes it impossible not to get one, but that’s another blog post. When the refund hits our account I’m already thinking about buying the latest gadget or a new piece of furniture, which is funny because I’m usually frugal when it comes to buying new things.
But for a bonus, that is money I view as a way to save for a big purchase like a home remodel. Or as a way to save for future use such as a vacation or a way to fund our next car purchase.
Now that I’ve noticed that I do this, I’m asking myself why I never think to give any more than a tithe from my paycheck or a bonus. I never think to invest a percentage of money received from a bonus, refund, or gift into my Roth IRA or my children’s college fund.
But I’ve realized that it isn’t just me who thinks like this. All over social media and in conversation people are sharing what they have bought or are going to do with their tax refund. But does this separation of how we treat money by how we receive it hurt our finances? If we have a goal, shouldn’t all of our money go to it regardless of the source? If we’re trying to get out of debt, we wouldn’t go buy a new television with our normal income, but why is it okay to do it if it is a tax refund? Or if we want to save an emergency fund, any extra money we get should go to that.
I’ve written before about the importance of being financially intense and focusing on one task at a time. But I’ve recently realized there are some areas of my financial life where I’m not. So what about you? Do you view money differently depending on the source? Why do you think that is?