The Importance of Money…

I enjoyed a couple of articles in recent days about the importance of money in our lives. The first one (seen here) discussed how more money can indeed make you happier (contrary to the popular opinion that more money doesn’t necessarily correlate to more happiness). The other article asked an important question – what’s important about money to you?

Of course these things interest me because I get to play the role of a money expert on the internet (little do you know!  Bwahahaha!).  And I found this section from the NY Times article particularly pertinent:

The purpose of this question isn’t to think in terms of goals. It’s meant to go deeper than that, or to get at the reason why we have certain goals. The first answers people come up with are usually easy — things like security and freedom. But once we pause and really think, we can move even deeper still, or into what might be called the “why” of money. This question gets uncomfortable because it forces us to get really clear about our underlying reason for doing things. It also forces us to face some inconsistencies in our lives.

Let’s say the first thing you come up with when you ask yourself the question — what’s important about money — is indeed freedom or security. Then, the next question you should ask yourself is, “What’s so important to me about freedom and security?’” From there, keep asking questions until you get to until you get to the thing that is most important to you.

Here’s how it works.

My friend, who we’ll call Sara, was a hard-charging professional whose career required her to be super competitive. She was “type A” to the hilt and worked long hours. So when I talked to Sara and her husband and asked her this question, I was curious what she would say was most important. She said freedom.

When I asked her what freedom meant, she replied, “More time.”

So I said, “Okay, let’s pretend you’re there. Let’s say you have more time. What’s so important about being at that spot?”

With some emotion she said, “I just want the time to raise a child.”

Time, huh?  When you read my paper on the monetary system you’ll see a recurring theme in there – the importance of time.  After all, aren’t we all ultimately racing against a clock?  The Monetary Realism law states:

“We generate improving living standards through the efficient use of resources resulting in the optimization of time”

That’s a pretty broad statement, but it’s one that should resonate with you when you understand what money really is.  Money is just a means to an end.  Yes, having more money can (some times) mean more time.  But it can also (at times) mean more responsibility, more hardship and less time.  It depends on the specifics of course.  But the overarching message shouldn’t be lost in all of this.  I’d argue that it’s in the achievement and pursuit of something greater than money that we ultimately measure ourselves.  Money is simply the tool with which we try to achieve some end.  It is not in and of itself the end.  And that’s the real lesson here.


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Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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  • DH

    If everyone was wealthy, you couldn’t find anyone to pick tomatoes or tend the counter at Burger King. If people doing those jobs were cash rich, then it would take a billion dollar nest egg to retire. The poor are always going to be with us.

    Long ago I tried going to a church. It didn’t last. The minister always had his hand out to support his pet social justice causes. I actually think he might have gone to Mexico to advertise the giveaways available where he lived. He expected us to dig deep to give these people a better life when they arrived. You got scowls if you didn’t play along. I got scowled at a lot since I viewed him as importing cheap labor intended for life in the underclass. I eventually quit the church. If this minister had all the money in the world, it would just be spent on whatever, it would eventually run out, and he would have had to scowl even more to keep the cash flow coming.

    The moral: money is an incentive, not the provider of a universal utopia. If you want some, you work for it, you win the lottery, go get good at scowling, or whatever. If it’s not scarce, it has no value.

  • DH

    Or, I suppose you could just place wagers in equity or commodity markets and hope the Fed keeps the cash flow coming. Scowls from TBTF bankers appear to work well in this regard … they keep the cash flow coming and HFT algos do the rest to skim some off.

    I have no problem with the Fed keeping markets liquid, since a lack of liquidity is the cause of all corrections. I just see unending liquidity the root cause of asset bubbles (which eventually pop) and a disincentive to make productive investment that creates jobs.

  • Conventional Wisdumb

    Money is a form of potential energy. Its energy potential depends upon how it is used.

  • Blobby

    I like the time is money, is freedom angle.
    It sits well with me.
    I hate being obliged to do things for incompetents. It takes so much time and effort..
    The benefit of the “suffering” is the freedom it gives me in my own life to do what I want to do.
    Selfish, probably. But its all about optimal resource allocation (aka time!)

  • Johnny Evers

    I ask every prospect or client who meets with me some form of this question: ‘What is this money going to be used for?’
    It’s amazing how many people really don’t know. But once they do know, it makes investing decisions very easy.

    Also I think that for most Americans, money means survival. Discussion about freedom and security are nice, only if you have the excess money. The discussion beyond that usually elevates to: ‘How can I help someone else with this money?’ Then you move on to legacy issues, or charitable giving or political action.

  • rufusmcbufus

    I fail to see any point to money other than I’d just like to wake up in the morning and dink around on whatever comes to my head that day. I want to run on my own treadmill. This does not mean a new thing every day because I guarantee there would be multi-day things going on. Point is, it’s what I thought about doing, not what someone else thought about doing. Right now I only live for someone else’s treadmill and this is a massive travesty that I cannot seem to get around. To some this way of thinking is an abomination. Why? Why is this the wrong way to think?

  • Johnny Evers

    It is interesting that this discussion is about how do we spend our money, which, in a consumer-driven economy is perhaps understandable.
    But shouldn’t we be talking about how to earn money? What do we do to produce money?
    And so far as our neighbors are concerned, it’s what we do to earn money that benefits our fellow man. While the Kardasian girls probably do help the economy with their spending habits, they don’t actually produce anything that helps the economy — unlike the man pushing the broom, for example.
    This focus on spending money becomes the focus of our policy discussions. The economy is weak — therefore, the answer is to spend more money. This money should be borrowed or printed, but we believe that more money will add to our happiness.
    Maybe we should approach it for the other side and ask ourselves what needs to be done to benefit our standard of living and then devote our energy, time and resources to that.

  • Windchaser

    Yeah, I came to that realization a few years ago. “Money is freedom.”

    People tell me “money isn’t everything”, and while true, I reply that being financially secure gives you the freedom to quit your crappy job for a better one if you want, or to spend more time with your kids, or to take that trip that you’ve always wanted. It’s the freedom to start that business that you’ve always dreamed about.

    So, yeah, money isn’t everything.. but it’s usually the biggest factor in stopping people from pursuing what they really care about.

  • Cowpoke

    M=T P=OPT
    Money=Time, Profit=Other Peoples Time.
    I am trying to come up with a formula any suggestions?

  • Cowpoke

    Anyone see the movie “In Time”?

    In the year 2169, humanity has been genetically engineered to stop aging at 25 and to be born with a digital clock, bearing a year worth of time, on their forearm. At the age of 25 the clock begins counting down, when it reaches zero that person dies. Time has been turned into the universal currency, giving time for products or services just by body contact, as well as transferring to others. A person can no longer die of old age and can only die by “timing out” (running out of time), having one’s clock “cleaned” (murder by someone taking all their time), or simply by being reckless that age is not a factor in that reason (e.g. getting shot, overdosing, etc.). The country is divided into time zones, based on the wealth of its population; the film focuses on two time zones. Dayton, a ghetto zone whose inhabitants barely have a day if they don’t work in the local factory, is one of the poorest with people being indifferent to the timed-out bodies on the streets. The other zone is New Greenwich, the wealthiest zone where the wealthy enjoy the benefits of their immortality and wealth but are constantly surrounded by body guards and are very conscious about their actions to prevent non-age related deaths.”

  • http://None Pete

    Money has social and historic elements. Society evolves, and human history is bloody. People kill people for money, and for resources too. People work under the sun for 16 hours a day for a dollar. Anyone wondering about the meaning of money should be sent to a pig farm to work out the answer, and believe it or not, they will come up with an answer, and it will not be the one in the above article.

  • Nils

    One of the flaws of capitalism is that there are two ways to attain wealth. You can produce it, or you can take it from those who produce it. Sadly, both ways are equally rewarded.

  • Valuation Consultant

    This is misguided. The Kardashians provide entertainment to millions of people.

    You can argue about the quality of the entertainment sure, but clearly the ratings and money support whatever they do.

    It is no different than a rockstar or sports player. They entertain millions of people, and are rewarded for doing so.

  • Geoff

    Many people are conflating “money” with “wealth” in this thread, including Cullen, I think. Personally, most of my wealth is not held in the form of money, but rather in stocks, bonds and real estate.

  • Johnny Evers

    No doubt, I agree with that. But my point was that because our economists are very good at tracking and recording ‘money,’ and because the reward system for who gets the money is screwed up, we are not doing a very good job of measuring quality of life issues.
    Do the Kardasians add more value to qualify of life than an ER nurse or even the school janitor? Of course not.
    I mean, if you were funding a stimulus, would you plan to find some airheaded teenage girl and give her money to entertain us? Would that make the economy better? It would in the sense that she would spend that money into the economy. But it wouldn’t leave any longlasting benefit.
    On the other hand, if you inspired some other smart young person to study and learn — even if the money spent was very little — the economic and social benefit would be huge.

  • Cullen Roche

    Money can make up a part of our wealth. But that depends on how you measure a “wealthy” person. A man with many friends, good health and moderate financial wealth is far wealthier than an unhealthy friendless billionaire in my opinion.

    Money is not wealth is the point even if money can make up a portion of someone’s wealth by some measures….

  • Geoff


  • Tom Brown

    Yes, true wealth only comes with unbridled power with which to crush your enemies. Everything else pales in comparison ;)

  • William Bedloe

    To some, money may mean freedom, security or simply “more time”. To a criminal or a politician (unless I am being redundant), it may mean power or the ability to influence. To someone altruistic, it is a means to help as many people as possible. To a person in some hellish place on earth, money may simply be the difference between life and death. It is as it has always been – in the eye of the beholder.

  • Sam A

    The Dalai Lama, when asked what surprised him most about humanity, he said:

    “Man. Because he sacrifices his health in order to make money.
    Then he sacrifices money to recuperate his health.
    And then he is so anxious about the future that he does not enjoy the present;
    the result being that he does not live in the present or the future;
    he lives as if he is never going to die, and then dies having never really lived.”

    Money isn’t wealth, time or power. It’s a utility that is overrated and often detrimental to both health and happiness.

  • micro2macro

    Money means different things to different people. Imagine going to the slums in India, or any slum for that matter, and explaining that money affords you time. I suspect for the poor money means a life lifted out of grinding poverty, bad health and a dim future. Money in their case may mean that a parent can see a brighter future for their children and better health.

    I dont wish to offend at all, but if you have time to debate the meaning of money, then you have enough to have moved up Maslow’s hierarchy.

    Doesn’t it boil down to individual circumstances?