Money Won

It's the week of Christmas, and instead of deciding on thoughtful gifts for my friends and loved ones or contemplating on the birth of the world's savior, I am agonizing about which runningback to start in the flex position. Yes, it is another fantasy football post and, yes, technically this is still a personal finance blog, but just barely. As long as I somehow connect these ideas to money in the next five minutes, I think I still get to attend FinCon next year.

So I'm in two different fantasy football leagues this season, which is actually cutting down, for me. As a full on fantasy addict, I was in as many as five different leagues some years. But these days I only keep the two that keep me in touch with my buddies back in San Diego. While these leagues are really just excuses to call my friends more often during the fall and winter, they also have the added benefit of possibly paying for our Christmas presents and the chance to lord a victory over my buddies for the next twelve months.

This year, I'm lucky enough to be in the playoffs in both leagues again. If I win either game this week, I'll be in the championship game, and in black for the year. Each league pays $600 to first place and $300 to second, so we'll make some decent coin regardless of what happens next week, if I can win today.

What will we do with the winnings? Mrs. Done by Forty is eyeing this Saddleback bag. So If I want anything left over for myself, I better win both leagues. If that happens, I'm hankering for an Xbox or a PlayStation, mostly so I can finally play Madden again. I haven't played since I was in my twenties, but I remember it being a great way to waste a few hundred hours.

It's oddly fun to think about spending this money, the cash won from gambling. It is different than the paycheck I earn from my job, or the returns we might get from investments or from our rental properties. Winning from gambling feels uniquely like found money: something that falls out of the ether like manna, and really ought to be spent frivolously, if at all possible. While most of our money is tracked and budgeted and applied in a logical manner, found money is "extra" and is a chance to splurge a little, without hurting our savings goals.

This makes no sense, of course. All money is fungible so it doesn't matter where it comes from. In a coolly rational sense, any money ought to be applied to our bills and our goals regardless of its source. If we want to retire by such and such a date and need X savings rate to get there, we should probably put that percentage of all funds into our investments.

But I don't want to do that with my fun money.

When I start compartmentalizing money from different sources into separate buckets, I'm engaging in mental accounting. That's why money from my paycheck is grown-up money that ought to be earmarked for the mortgage and investments, but the check I get in a birthday card from my sweet old aunt goes to drinks at happy hour. It's also the reason that I want to buy a new scooter every spring when we get a tax refund, even though we already have two and, seriously, who in the world needs three scooters?

But as many mistakes that mental accounting can get us in to, the funny part is that mental accounting sometimes works in our favor. Put some money in a savings account labeled, "House Down Payment" and, poof, magically it's less likely to be spent, even though it's just as accessible as the money in your checking account. Same with my contributions into my IRA. It's my money and I can take out my contributions (just not the growth) any time, tax and penalty free. But hardly anyone does that, even people who might overdraw their checking account from time to time, because we've created the mental account of retirement savings.

Mental accounting, sometimes, also saves us our most valuable resource: time.

"The alternative to having mental accounts, Thaler said, is to consciously ask yourself to ask what every purchase is worth and compare it with every other purchase. Is a latte worth the same as a pair of socks? Just as your boss doesn't want to be bothered with trivial decisions on whether you charge the company $20 or $22 for a meal, you don't want to waste time thinking about trivial purchasing decisions."

When I create a $30 monthly budget for coffee, that mental account allows me to easily buy the occasional latte without having to spend time wondering if those four dollars would be better used in a retirement account. While on paper it's neat to think about how money is fungible, and any dollar could be applied to any number of potentially optimal choices as we approach maximum frugality, in reality, that practice is exhausting. People, or at least the two people who live in our household, do better having a budget for certain categories, and then trying to spend within that budget. It simplifies things, and keeps me from spending time pondering where each five spot ought to go.

But back to fantasy. The early games have started, and twelve hundred bucks are on the line. If we get lucky, I might just get to buy my wife a fancy five hundred dollar bag. Yeah, it's a pretty absurd amount of money to spend on a glorified briefcase.

But even if we spend it, luckily it won't hurt our savings goals anyway. The money's extra, fallen from out of the ether, and really ought to be blown on something nice that we wouldn't normally buy for ourselves. Maybe that's why money won is twice as sweet. It allows us to have some nice things, some little luxuries, without feeling guilty. Mental fallacy or not, that is worth something, too.

*Photo is from futureshape on Flickr Creative Commons.