Why We All See Money Differently?

Why We All See Money Differently: It's Not About Being "Crazy," It's About Experience

Ever looked at someone's financial choices and thought, "Are they crazy?" Perhaps it was how they spent their money, or invested it, or saved (or didn't save) a dime. The truth is, no one is crazy when it comes to money. Their actions, which might seem illogical or even reckless to you, make perfect sense to them. This fundamental difference in financial perception stems from one powerful force: unique life experiences.

The core premise is that doing well with money has less to do with how smart you are and a lot more to do with how you behave. And behavior is hard to teach, even to really smart people.

The Wildly Different Paths to Wealth (or Ruin)

Consider these contrasting stories that highlight how personal experiences forge distinct financial realities:

• The Tech Executive vs. The Janitor:
  • One brilliant **technology executive** in Los Angeles, who designed key Wi-Fi components and sold multiple companies, famously carried thick stacks of hundred-dollar bills, bragged about his wealth, and even threw thousand-dollar gold coins into the ocean "just for fun". This "wildly successful" genius eventually went broke, his relationship with money described as a "mix of insecurity and childish stupidity".
  • In stark contrast, **Ronald Read**, a janitor and gas station attendant from rural Vermont, lived an exceptionally low-key life, buying a modest $12,000 house and driving a second-hand Toyota Camry. He simply saved what little he could and invested it in blue-chip stocks. When he died at 92, he left over **$8 million** to local charities and his stepchildren, baffling those who knew him. There was "no secret," just **decades of tiny savings compounding**.
  • Similarly, **Richard Fuscone**, a Harvard-educated Merrill Lynch executive who retired in his 40s to become a philanthropist, later went bankrupt after borrowing heavily to maintain an 18,000-square-foot mansion. The source suggests Read was **patient**, while Fuscone was **greedy**, illustrating how behavior overshadowed even a "massive education and experience gap".

These stories are unique to finance. In what other industry does someone with no college degree, no training, no background, no formal experience, and no connections massively outperform someone with the best education, the best training, and the best connections? It is impossible to think of a janitor performing heart surgery better than a Harvard-trained surgeon, or designing a skyscraper superior to trained architects. It underscores that financial success is a **"soft skill," where how you behave is more important than what you know**.

Your Past Dictates Your Present Financial View

Our individual histories heavily influence our investment decisions, particularly experiences early in adult life.

• People who grew up during **high inflation** periods tend to invest less in bonds later in life, while those who experienced strong stock markets early on are more likely to invest in stocks. Someone born in 1970, for instance, saw the S&P 500 increase almost tenfold during their teens and twenties, while someone born in 1950 saw the market go nowhere in their formative years. These differing experiences lead to **"completely different views on how the stock market works"**.
• Even perceptions of basic concepts can differ wildly. An American might view factory conditions in a "sweatshop" as atrocious. However, for a Chinese factory worker, whose alternative was prostitution, such work could be seen as a **"better life"**. This reveals how different backgrounds lead to opposing views on what one side might intuitively consider "black and white".
• The fact that **lowest-income households spend significantly more on lottery tickets** than higher-income groups, despite many being unable to afford a $400 emergency, seems "crazy" to some. But from the buyers' perspective, it's about paying for "a tangible dream of getting the good stuff" that others take for granted, offering the only real vision of a better life.

The Newness of Our Financial World

Another crucial factor contributing to diverse financial behaviors is the relative newness of many modern financial concepts.

• Concepts like saving for retirement in a **401(k) (which didn't exist until 1978)** or a Roth IRA (born in 1998) are barely a generation or two old. This means we lack the decades of accumulated historical experience that guides other aspects of life. In essence, **"We're winging it"**.
• This lack of historical precedent means people often make decisions based on limited personal experience, and **"what you’ve experienced is more compelling than what you learn second-hand"**.

Reasonable Over Rational: The Human Factor

Given these complexities, the advice isn't to be "coldly rational" in financial decisions, but to be **"pretty reasonable."** The author contends that "reasonable is more realistic and you have a better chance of sticking with it for the long run, which is what matters most when managing money".

• Even Nobel laureate Harry Markowitz, who pioneered modern portfolio theory, allocated his own money 50/50 between bonds and equities to **"minimize his future regret,"** rather than adhering to a mathematically optimal strategy. This "reasonable" approach considers the social and emotional aspects of investing, which are often ignored in purely financial models.
• A rational strategy might suggest young savers use two-to-one leverage on retirement accounts to maximize returns. However, this is "absurdly unreasonable" in real life, because no normal person could mentally withstand losing 100% of their retirement account if the market dropped significantly. They'd quit and look for a different option.

Understanding Leads to Empathy (and Better Decisions)

Money is everywhere, affects everyone, and confuses most. **Everyone thinks about it a little differently**. When you realize that others' financial behaviors, no matter how "crazy" they seem, are rooted in their unique and equally persuasive life experiences, it fosters a vital understanding. This perspective encourages **less judgment about what others do with their money and a greater focus on what truly works for you**. After all, financial success is less about hard science and more about the soft skills of psychology and behavior.

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