Is it normal to think of money in different “contexts”?
The psychology around money is the subject of a lifetime of study.  Your observations are not uncommon.  The market daily fluctuation is out of our control. Hopefully, by the time the 1% volatility impacts you by say $1,000, you'll have grown accustomed to it, so when the 1% is then $10,000, you won't lose sleep. The difference between the $1000 up/down and the $3 sandwich is simple - one is in your control, the other isn't.  When you're out, you need to try to cut down on the math, it will only bring you unhappiness. You're paying for the socializing and can't let the individual items on the check bother you. I'm at the point in my life when I prefer a more expensive restaurant meal that I can't make at home to a moderate one that I'd make myself. For me, that logic works, and it's not keeping us home. Funny how my own sense of value for the dollar pushes me to a more expensive experience, but one that I'll enjoy.  By the way - eBay has done an amazing thing, it's created a market for you to sell your stuff, but it's also pulled everyone's collection of junk out for sale. Books I thought might be worth selling go for $1-$2 plus shipping. It's not worth my time or effort, and I need to just break the emotional ties to 'stuff.' I box them up and bring them to the library for their sale. If that picture frame isn't antique, throw it out or have a yard sale.  This may be right on track to your question or a complete tangent.... All value given to products is subjective and is different from person to person.  It can also vary for the same person from year to year, month to month, day to day, or even hour to hour as a person analyzes different products and prices to determine which imparts the most value to him or her at a given point in time. In regards to losing money in your investment accounts.  This reminds of a book I read on Jesse Livermore.  Jesse was a famous stock broker who made millions (in the 1920's so he would be a billionaire in today's money) in the stock market multiple times.  Jesse felt like  you - he felt like after a while the losses on paper did not seem to concern him as much as he thought it should.  He thought it was due to the investment accounts being simply being numbers on papers and not cold, hard cash. So what did Jesse do to remove the abstract nature of investment accounts?   From here: Livermore always sold out all his positions at the end of every year   and had the cash deposited in his account at the Chase Manhattan Bank.   Then he would arrange with the bank to have the money, in cash, in the   bank’s vault in chests. “There was a desk, a chair, a cot and an easy   chair in the middle of the cash.” On the occasion described in 1923,   there was $50 million in cash.  In the corner was a fridge with food,   enough for a few days. There was lighting installed. Then, like   Scrooge McDuck, Livermore would have himself locked in the vault with   his cash. He would stay a couple of days and “review his year from   every aspect.”  After his stay was over, he would fill his pockets with cash and go on   a shopping spree.   He would also take  a vacation and not re-enter   the market until February. But unlike Scrooge McDuck, this was not the act of a miser, explains   Smitten.  Livermore lived a world of paper transactions all year long.   He believed that “by the end of the year he had lost his perception of   what the paper slips really represented, cash money and ultimately   power.”  He “needed to touch the money and feel the power of cash.” It   made him re-appraise his stock and commodity positions. Imagine the $60,000 from your investment account sitting on your kitchen table.  Imagine seeing $1,000 dumped into the trash can one day.  I know I would appreciate the money much more seeing that happen. "Well, this relates to how you interpret something's value. We can use that magazine and restaurant as an example. For you the extra $10-$30 more on a decent meal or wine is worth it while $5 for a magazine entertainment on a train ride might not be. This is how all markets work, people make decisions about how they value something and hence choose to spend or not. If you're asking ""should I value certain things the way I do?"" well that's a different story  e.g. should I keep that picture frame for years in the attic to sell it for $3 on eBay later. (probably not worth it) But again you are making that decision based on how YOU choose to value it. So to answer your question: How can I possibly care about this when my stock portfolio is losing (or gaining) $1000 a day? and is it normal? Yes it is normal and we all care. Everyone makes these decisions throughout each day, people will vary as to what they value something to be, but all in all everyone does just what you explained. Here is something that you may find interesting it is about how we value money: What color is your money? if the pdf doesn't work for you then try this link: What color is your money alt link" Here's how I think about money. There are only 3 categories / contexts (buckets) that my earned money falls into. Savings is my emergency fund. I keep 6 months of total expenses (expenses are anything in the consumption bucket). You can be as detailed as you want with this area but I tend to leave a fudge factor. In other words, if I estimate that I spend approximately $3,000 a month in consumption dollars then I'll save $3,500 times 6 in the bank. This money needs to be liquid. Some people use a HELOC, other people use their ROTH contributions. In any case, you need to put this money some place you can get access to it in case you go from accumulation (income exceed expenses) to decumulation mode (expenses exceed income). This money is distinct from consumption which I will cover in paragraph three. Investments are stocks, bonds, income producing real estate, small businesses, etc. These dollars require a strategy. The strategy can include some form of asset allocation but more importantly a timeline. These are the dollars that are working for you. Each dollar placed here will multiply over time. Once you put a dollar here it shouldn't be taken out unless there is some sort of catastrophe that your savings can't handle or your timeline has been achieved. Notice that rental real estate is included so liquidating stocks to purchase rental real estate is NOT considered removing investment dollars. Just reallocating based on your asset allocation. This bucket includes 401k's, IRAs, all tax-sheltered accounts, non-sheltered brokerage accounts, and rental real estate. In general your primary residence is not included in this bucket. Some people include the equity of their primary residence in the investment column but it can complicate the equation and I prefer to leave it out. The consumption bucket is the most important bucket and the one you spend the most time with. It requires a budget. This includes your $5 magazine and your $200 bottle of wine. Anything in this bucket is gone. You can recover a portion of it by selling it on ebay for $3 (these are earned dollars) but the original $5 is still considered spent. The reason your thought process in this area is distinct from the other two, the decisions made in this area will have the biggest impact on your personal finances. Warren Buffett was famous for skimping on haircuts because they are worth thousands of dollars down the road if they are invested instead. Remember this is a zero-sum game so every $1 not consumed is placed in one of the other buckets. Once your savings bucket is full every dollar not consumed is sent to investments. Remember to include everything that does not fit in the other two buckets. Most people forget their car insurance, life insurance, tax bill at the end of the year, accountant bill, etc. In conclusion, there are three buckets. Savings, which serve as your emergency bucket. This money should not be touched unless you switch from accumulation to decumulation. Investments, which are your dollars that are working for you over time. They require a strategy and a timeline. Consumption, which are your monthly expenses. These dollars keep you alive and contribute to your enjoyment. This is a short explanation of my use of money. It can get as complicated and detailed as you want it to be but as long as you tag your dollars correctly you'll be okay IMHO. HTH.
"Your premise is false.  When you withdraw money from a Tax Free Savings Account (TFSA), there is no tax due.  Yes, you can read that again:  withdrawals from a TFSA are tax free.  They are labeled ""tax free"" for a good reason!  After-tax money is deposited, and then from that point forward, no tax, no tax, no tax.  :-) On a ""normal"", non-registered investment or savings account with no special treatment, your investment earnings will be taxed whenever gains are realized or income received (e.g. dividends or interest).  You will necessarily have less in a normal non-registered investment or savings account compared to a TFSA, as long as the rate of return was positive, i.e. growing. Perhaps you were thinking not of comparing a regular investment account to a TFSA, but rather to a Registered Retirement Savings Plan (RRSP)? In the case of an RRSP, there is an up-front tax deduction, then earnings grow tax-deferred, and then on withdrawal, income tax is paid at regular rates.  Even then, with RRSPs, if your marginal tax rate remains the same over time (not necessarily a reasonable assumption, but let's go with it) then you should still realize more after-tax income from your RRSP than from a normal non-registered investment or savings account.  (Though, there's likely an exception case when most income came as qualified dividends and the capital itself hasn't appreciated.)" "—they will pull your credit report and perform a ""hard inquiry"" on your file. This means the inquiry will be noted in your credit report and count against you, slightly. This is perfectly normal. Just don't apply too many times too soon or it can begin to add up. They will want proof of your income by asking for recent pay stubs. With this information, your income and your credit profile, they will determine the maximum amount of credit they will lend you and at what interest rate. The better your credit profile, the more money they can lend and the lower the rate.  —that you want financed (the price of the car minus your down payment) that is the amount you can apply for and in that case the only factors they will determine are 1) whether or not you will be approved and 2) at what interest rate you will be approved. While interest rates generally follow the direction of the prime rate as dictated by the federal reserve, there are market fluctuations and variances from one lending institution to the next. Further, different institutions will have different criteria in terms of the amount of credit they deem you worthy of.  —you know the price of the car. Now determine how much you want to put down and take the difference to a bank or credit union. Or, work directly with the dealer. Dealers often give special deals if you finance through them. A common scenario is: 1) A person goes to the car dealer 2) test drives 3) negotiates the purchase price 4) the salesman works the numbers to determine your monthly payment through their own bank. Pay attention during that last process. This is also where they can gain leverage in the deal and make money through the interest rate by offering longer loan terms to maximize their returns on your loan. It's not necessarily a bad thing, it's just how they have to make their money in the deal. It's good to know so you can form your own analysis of the deal and make sure they don't completely bankrupt you.  —is that you can comfortable afford your monthly payment. The car dealers don't really know how much you can afford. They will try to determine to the best they can but only you really know. Don't take more than you can afford. be conservative about it. For example: Think you can only afford $300 a month? Budget it even lower and make yourself only afford $225 a month." I think the answer to this must differ from country to country.  I have lived in several countries where the normal everyday way of making a payment is to instruct my bank to transfer the money to the recipient's account.  Of course this means I must know his name, SC and account number – but this is an accepted part of the system; businesses routinely display that information on invoices and correspondence.  It is simply not regarded as confidential. DumbCoder's comment suggests that if he has that information he can take money from my account without my permission – in other words, my bank will pay money out of my account on someone else's request, without my authority.  Is this correct?  In which country or countries can this happen?   (I must go there quickly and begin stealing people's money.) The VP came into the restaurant I work at and I served him and a client. At the end he tipped me $10 on a $30 bill and left his card saying to call him if I'm interested in being his assistant. I don't think I did anything different than I would a normal table, but I guess he was impressed with my work ethic. the idea of working for someone who can appreciate my serving  and see more potential is exactly the kind of person I'd like to work for. "I think ""Psychological Pricing"" is a similar phenomenon to what you are looking for.  This is where retailers use certain numbers in prices because those prices are more appealing to consumers.  Since stocks - and in your case bitcoin - have prices, they too will be more or less appealing at different prices based on psychology alone." "The big reason why this is hard to wrap your head around via analogy is because we think of ""money"" as printed paper cash. Now, that stuff *is* money, but it's not the only kind of money. In fact, it's not even close to the majority of money in the system.   When you charge dinner to a credit-card, your credit-card company sends an electronic ""promise"" to the restaurant, which based on your ""promise"" to re-pay the credit-card company, which is in turn based on your employer's promise to pay you for wages that you earned this past week, and so on... Similarly, the restaurant pays their landlord and employees and suppliers with checks and electronic-funds funds transfers, which are promises that the restaurant's bank will pay the check-holder's bank and so on.   It's not like there are gnomes running around with bags of cash or gold behind the scenes: these ""promises"" are money that is actually being spent and re-spent, usually *without ever getting reconciled as actual cash withdrawals of printed currency.* It's promises all the way down: You can pay off a mortgage without ever once handing anyone a single printed dollar-- it's just checks and bank-transfers from your employers/investments, passed along to the creditor. And that's *real money*, even if it never gets printed.   This can be pretty cleanly described mathematically (that's the kind of stuff where econ is pretty genuinely a ""science"", as opposed to the messier market-prediction and public-policy stuff). But it is very hard to make sense of via ""analogy"".   That's why I used a fictional world where money doesn't exist. If you set aside your preconceptions, don't try to second-guess or think ahead to the conclusions, but just read through the story as it is written, you will see that there is *no meaningful difference at all* between the apple-certificates, the merchant-cartel-printed loddars, and a personal IOU handwritten from one person to another, except for the credibility of the issuer.   Seriously, don't argue, don't ""yeah, but"", don't try to tie this to your paycheck, don't try to think about how this relates to the mortgage collapse, just read through the story as it is written. Because I can't ""prove"" to you (except through pretty hairy mathematical models) that money is debt by explaining it in reverse-- it runs counter to all of your experiences as a participant in the model, in countless ways. *But it is*.   Until you internalize that fact, and wrap your head around the fact that money is just IOUs, it will never make sense that money can be just ""gone"". If you sell me a watermelon, and I get hit by a bus carrying it home, the watermelon is gone. ""Yeah, but I still have the money"", you say.   But suppose that instead of cash, I had written a promise to come paint your house this weekend. ""Sure,"" you say, ""but that's not the same as money."" *But it is*, in very literal ways.   I'm never going to convince you that my promise to paint your house is the same fundamental stuff as US Dollars, differentiated only by the credibility of the issuer... you're just not going to believe me, and we'll get nowhere arguing analogies.   So instead, just read through the story above, without prejudice, and follow the history of that little make-pretend world. Because you'll never make sense of ""where the money went"" until you can internalize the concept of money as promises that can be broken." "Wealth is not distributed equally in any economy.  And, even if it were, differentiation between people would lead to different interests being expressed in different ways. As people either attempt to earn more (to improve their situation) or different people express those interests in different ways (saving money to go on a skiing holiday, or to put a downpayment on a house) people invite new products and services to be created to satisfy those demands. In addition, there is the problem of uncertainty.  People save money today to cope with uncertainty tomorrow (healthcare, pensions, education, etc.). Those savings don't remain idle, but are lent to others who believe that they can make a return through investing in new businesses or ideas. The point being that any dynamic economy will experience change in the amount of goods available to the people within that economy. From an economic perspective ""growth"" is just another permutation.  From a political perspective, ""growth"" implies that people are getting wealthier.  If that growth is asymmetrically distributed (e.g. the poor don't experience it and the middle classes don't feel they get enough of it) then that is a problem for politicians. The emerging markets of the world are trying to raise millions of people out of poverty.  Growth is a way of measuring how quickly they are achieving that end. Growth, in and of itself, is meaningless.  There are some people who believe that ""we"" (as some proxy of society) have enough stuff and growth is unnecessary but that implies that everyone is satisfied.  For as long as some people wish to have more wealth/stuff, and have the means to achieve this, there will be growth. And for as long as there is uncertainty growth will vary." Shops in most touristic places tend to accept major currencies (at least dollar and euro). I remember a trip in Istanbul before the euro existed, the kids selling postcards near the blue mosque were able to guess your country and announce in your language the price in your currency.