When $100 ≠ $100

What IS money? While the word, “money” has several connotations; the actual dollar bills and coins are a representation of value, which is used in everyday transactions. During times of economic slump, which we are now wading through, saving money is essential. Americans traditionally have one of the lowest savings rates worldwide – consistently zero percent and many even maintain debt due to excessive spending. As of May, the U.S. savings rate jumped to nearly 7% indicating that saving habits have shifted in wake of the recession. When then, do people continue to compartmentalize money based on origin?

All money is created equal. $100 equals $100 regardless of the origin. When you receive a paycheck after the daily grind, there is a sense of emotional attachment to that money. The money in a paycheck represents long hours, hard work, and the time that could’ve been spent at more enjoyable activities. The perception of income inherently has a high value since it derives from working. Conversely, when someone picks up a $20 bill from the sidewalk it is often perceived to be “free money.” Since no effort was exerted to “earn” the money, there is less hesitance to squander the money.

As irrational as it may seem, most people place different values on money depending on the source, placing virtual stickie notes on each bill to separate how much money is able to spent and on what. In reality, regardless of whether money is a gift or part of a salary or a rumpled bill found in a coat jacket, it equally contributes to a person’s wealth. When $150 is spent on a pair of designer jeans that were an impulse buy, the $150 is not just coming from gift money, regardless of how much someone wants to believe that it is, but the money is subtracted from a consumer’s overall balance.

Americans are heading in the right direction as far as saving is concerned. 6.9 percent is a drastic jump from the negative saving rates of the past, but until a consumer can view all money as holding the same value, wasteful spending will ensue.