Although this statement seems obvious it is worth repeating it to ourselves from time to time, so we can realize that we frequently forget it, disregard it or, simply act as if it was not true.
How many times have we heard the phrase “easy comes, easy goes.”? I would like to illustrate this point with a well-known example.
In the book “Why smart people make big money mistakes (and how to correct them)” authors Gary Belsky and Thomas Gilovich share the “The Legend of The Man In The Green Bathrobe”.
In that story, a guy whose honeymoon had a last stop in Las Vegas serendipitously found a $5 chip laying on its dresser, oddly the number 17 was flashing on the chip’s face, and he took this as an omen. Quickly, he took his green bathrobe, went down to the casino and headed to the roulette tables where he bet the $5 on the number 17, turning a $175 win. Repeating this process three more times, with the same number 17, its cumulative amount exceeded $7.5 million. Before repeating the feat, the manager of the casino informed him that they could not take their bet again, as they could not face a loss of almost $263 million in case he nailed another win.
Our character, then, heads to another casino where lady fortune smiles upon him once more. Unfortunately, after putting the $263 million at play, the roulette’s ball lands on 18.
After facing the loss, he returns walking to his hotel. Upon arriving at the room, the wife asks where has he been, to which he responds that he had been playing roulette. When questioning him about how he had done, he replied: “Not bad. I lost five bucks”.
Besides granting that he gave an arguably good answer to his wife, which allowed him to see another day, I think it is necessary to analyze his motivations to bet so carelessly. Probably this man was willing to bet these millions because he considered that this money arrived easily, whereas if he had considered this money as part of his paycheck, or even his net worth, his willingness to set it at risk would have probably been different.
It is not necessary to come to such an exaggerated point to realize that we usually make similar decisions on a day-to-day basis. How many times have we not destined extraordinary inflows to superfluous expenses or unnecessary luxuries? If we are sports fans, and we have win a bet, we probably have not used our winnings to pay for utilities, groceries or gas.
If we keep in mind that a dollar is worth a dollar, we could use these flows for higher order purposes such as debt reduction or contributing to our savings and wealth generation plans. We do not need to lose $263 million to realize that we can make better decisions.