(3 minute read)
Hiya accounting fans! Money is a means to an end.
I think most of us can agree with that. But in doing so, we must remember, Money is NOT the end.
When I was younger, I used to think success meant having a flash car, a big house, lots of cash to spend and millions and millions of dollars in the bank. I’d like to think many of us thought that as well. It doesn’t help that popular media celebrates teenage millionaires, young wealthy celebrities and rich people in general.
This was true back in the 1970s, as it was in the 2000s, as it is again now that we’re in the 2020s (or ‘the future’ as they called it back in the 90s). The accumulation of wealth is still a benchmark for success.
Even in our ‘modern’ world, we still equate more money = more happiness. But this isn’t necessarily the case. Here’s why:
Money is the means to an end. That end is happiness.
Wait, are you contradicting yourself Sam?
Yes and no. I agree that money can’t buy happiness. Let me make that clear. But, it’s hard to be happy when you don’t have food on the table or can’t keep the lights on. Money helps provide for a basic level of comfort. Food for the family. Clothes on their back. A roof over their head. You can’t be happy when you’re basic needs aren’t being met.
So we work, trade, build, sell, develop and share our knowledge in exchange for money. Money is the currency of exchange that we use to keep our basic needs met. In 2010, a group of researchers from Princeton University found that income had a reduced effect on increasing ‘happiness’ after USD 75,000 a year. The same research also says that high income earners are less ‘ground down’ by day to day problems as compared to low income earners. The same study which looked at 450,000 Americans also found that 85% of them reported feeling ‘happy’ regardless of their income levels.
So what this tells us is that, to a certain extent, yes, money ‘buys’ happiness. But only to a point. After that, why are we accumulating more money?
Money is the means to an end. That end isn’t more money.
‘I wanna be a billionaire~ so freaking bad. Buy all of the things I never had’
Thanks Bruno Mars for teaching 20 year old me that being a billionaire was everything. Fortunately I wised up. Thanks to a lot of pain and struggle. Losing my job, a divorce, moving towns, a break-up, shifting countries, almost failing my studies and then failing to break into the job market have taught me a lot about my relationship with money.
I’ve never been ‘rich’ in a material sense over the past ten years. It was always a struggle from one source of income to the next. But in between all that struggling, I still found time to be happy. The simple joys of making new friends. The thrill of exploring a new country. The sense of accomplishment that came with getting my PhD. And in all that time, I was never making more than $36,000 (NZD) a year. I only had myself to worry about. So long as I had a roof over my head, a warm bed and food to eat, I was, for all intents and purposes. Happy.
Sure, there were things I couldn’t do because I didn’t have money. Like skydiving, bungee jumping and investing in the stock market. But being able to do these things wouldn’t have made me more happy than I already was. In other words, If I had more money, I wouldn’t be more happy.
Money is the means to an end. So stop hoarding money!
As humans, there seems to be some sort of greed mentality that makes us hoard resources. Like jealous dragons, we let the cash in our bank accounts accumulate because we like having lots of money. For whatever reason, a bigger bank balance makes us feel safe. But this isn’t the case. A bank balance that is enough to cover our basic needs is often enough to keep us happy.
So why make more money then? You might ask.
With more money comes the ability to do more things. Things like securing your retirement lifestyle, helping your chosen charity, or simply being able to inspire financial confidence in others. That’s where financial goals come into play. Extra money after basic needs should go towards investments for your financial future, your family’s education and the wellbeing of your community.
Also, from a financial point of view – money sitting in your bank account is losing its value everyday. So you better put that extra money to good use!
Extra money is a privilege. Invest it wisely.
At the start of the Pandemic last year, I lost my job. Again. Through a combination of dogged determination, dumb luck and Divine Grace, I somehow found myself in the best financial position I’ve ever been in my entire life (thanks to you readers of course!). But that’s a story for a different time. The point I’m trying to make is that I didn’t get here on the strength of my ‘hard work’ alone. I had the privilege of a good education, a support network of family and friends, amazing clients and moments of sheer serendipity (dumb luck, really) that got me here.
Any ‘extra’ money I invest.
Investments towards our financial goals as a family. Investments towards my community.
This is why I like giving free business advice and financial resources for other business owners. Why I’m so passionate about teaching financial literacy to others for free. A stronger, financially literate community makes me happy. I’m hoping that by doing so, it will make the community a bit more happy as well.
Don’t hoard your money. Invest it in the things that will bring the greatest return of all:
Happiness. Not just for yourself, but for those around you as well.
Stay positive team!