You may start to question why money matters and the role it has in your life.
Our society is divided on the subject of money and happiness. We disagree about how much money we need and what to do with it.
You’ve probably heard a lot of different sayings related to money, either to be funny or to make a point.
You know them, for example:
Money doesn’t buy happiness.
Money is the root cause of all evil. – 1 Timothy 6.10
“Not having money is more important than not having any.” – Kanye West
You’ve likely heard many famous proverbs or sayings. Money is important, even if there are some truths to the saying that money shouldn’t dictate your life or choices.
Table of Contents
Why is money so important?
What are the real benefits of money?
Money’s Negative Side
How much money is enough?
Final Thoughts
Why is money so important?
Money is important because it gives you options to choose a better lifestyle and allows you to be in control. Money and financial comfort gives you the freedom to choose how you live your life and to support those things that are important to you.
It’s true, money can’t buy happiness. But greed is a powerful force that can lead people to do horrible things. Bernie Madoff’s greed for wealth and money led him to ruin many families that invested with him.
Money can have a negative connotation, but ultimately it is up to you to decide how to use your money.
Money may not be everything, but it is a powerful tool that can help you reach your goals and make the most of this short life.
What are the real benefits of money?
Even though your entire life doesn’t need to be focused on money or accumulating wealth it is important to devote your time and effort to building a plan and understanding the subject.
We all know having more money allows you to live a better life, take better vacations and buy flashier cars. These material goods are not what money is really about, and the excitement that comes with them quickly fades.
Why is money so important?
You Can Buy Your Freedom With Money
Money is important, because it allows you to do whatever you like, whenever you want and wherever you want. This is sometimes called “FU Money” and means that you have reached a point in your career where you are no longer reliant on others for financial support.
Are you interested in pursuing hobbies? Do you have a dream of starting your own business or a passion for sports? You can explore new areas with money and even take some risks.
The Money You Earn Gives Options
One of the greatest feelings is being able to choose and have options. It can be frustrating to feel stuck in a situation, because you desperately need money or financial assistance.
You can decide what you do or don’t do when you have money. Want a new career? Want to move from one state to another? You want to go on vacation somewhere else? Do it.
Money Creates Financial Security
Knowing that you don’t have to worry about finances is one of the best feelings. Financial stress can be a problem for many people, especially families.
You don’t worry about your bills or paying for medical care if you lose your work.
Money and a plan for your finances will give you and your family more security.
Money can create more life experiences
You should make the most of your time here, because it is short and will pass quickly.
It’s a waste to hoard money, and not spend it. After all, you can’t bring the money to your grave. It’s true. While it might not be a pleasant picture, this is the truth.
Money gives you the opportunity to travel, experience new things and break out of your bubble. It can also lead to a greater sense of happiness as you get more out of life.
Money helps you give more to your family
Although generational wealth is good, it’s important to instill in your children the right values and work ethic.
Money is important because it can give your family better opportunities for education, healthcare and a more positive start to life.
Many children are spoiled, and they have unrealistic expectations about money as they grow up. It’s important to teach them about money, and not give them all the little luxuries without hard work.
Give Money Back
You may eventually reach a point in your life where you are financially free and able to afford to give. It is rewarding to help charities, local communities, or other causes.
Tax incentives are available for charitable donations, but they shouldn’t be the main reason you give.
These are the most important reasons why money is so important. You should consider them when you’re pursuing financial independence. There are probably other reasons why money is important to you.
Money’s Negative Side
Money has many benefits, but it also has its downsides. It’s important to focus your energy on saving and investing, but you should also make sure that it doesn’t consume all of your decisions.
The obsession with money can cause problems
Obsessing about money and earning money can cause serious problems.
You can ruin your relationships with your family and friends if you spend all of your time focusing on money. You may also be led to unethical behaviors (see again Bernie Madoff), or criminal acts in order to make more money.
Obsession with money can be a destructive disorder. It can ruin both your life and the lives of others. You may have the most money in the universe, but who will be there to enjoy life next to you? You can’t trust anyone to care about your well-being and not just your wealth.
Stress from money can cause more stress
Money can reduce financial stress but can also increase stress. It’s funny how this works.
It can actually cause more stress for those who feel that money is always not enough.
You work crazy hours each week, spend every waking minute thinking about money and get anxious when you don’t achieve your goals. Stress not only affects your mental and physical well-being, but also those around you like your family and colleagues.
Can create more family disagreements
In a MarketWatch report, it was mentioned that TD Ameritrade had found that 41% divorced Gen Xers (and 29% Boomers) ended their marriages due to financial disagreements.
Money is still a major cause of disagreements between spouses and family members, even though these statistics are only a few short years old.
Money will be a major source of friction if you and your family are not on the exact same page. You won’t always agree, but if you share similar views and values about money, it can help to limit disagreements.
How much money is enough?
You can see that there’s nothing wrong in pursuing financial independence and wealth. There are also downsides.
When you allow greed to consume you, you will do anything you can to earn more money. You start hurting people, alienating friends and family and go down a path of self-destruction.
How much money do you really need?
The number that many people use to determine how much they need to save and invest to achieve financial freedom is 25x their annual expenses. If your annual expenses are $30,000, then you would want to save and invest $750,000.
It is a good starting point to determine how much money you need and why. This is a reasonable amount and goal that will allow you to live comfortably and happily.
Some people may find that the 25x goal is more than sufficient. Not everyone has to be Warren Buffett or Jeff Bezos. Others would never be happy with this amount.
Happiness begins to fade after a certain number
You should have a financial plan, a budget and a target net worth. It’s always a good thing to have a budget and financial goals.
It’s very easy to fall into bad habits of spending or always wanting more.
The authors of the fascinating study High income improves life evaluation but not emotional wellbeing by Daniel Kahneman & Angus Deaton explore the impact money has on your overall happiness.
The key findings of their research are that money increases your satisfaction to any level, but only up to a $75,000.
The research is much more detailed and from 2010. However, it’s worth remembering as you think about money and your finances.
Final Thoughts
The health of your family and yourself are two things that you should prioritize in life. You are probably living a rich life if you have these two things. Money is important and can lead to better opportunities in life.
Money won’t fix all of your problems. If you were unhappy before money, gaining wealth might only be a temporary remedy.
It is important to find a balance that allows you to see money not as a necessity, but rather as a tool which can be used for creating better experiences and opportunities in your life.
