What is Money Worth?

This is a guest post by Robert, who lives in Calgary and works as a financial adviser retired at 34. He is married, has three kids.  Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.

My sons each have a birthday in the month of September. Their grandmother sent them each a card with a $10 bill in it. They were super excited. It was interesting to see what the money, a relatively large amount for them, meant to each of them. Michael, the 7 year old, thought about what he could buy with it. He seems unable to be happy with money until it is spent. Jeremy, the 5 year old, put his carefully in his wallet. He has now saved up over $20 and he seems to be happy just to have the money.

What Michael understands, that Jeremy doesn’t, is that the sole purpose of money is to exchange it for the things we want and need. When Jeremy saves his money, he isn’t able to buy candy to eat or buy toys to play with or buy a ticket to the amusement park for fun. His money just sits in his wallet, not benefiting him.

What Jeremy understands, that Michael doesn’t, is the value of money. Jeremy will sometimes find something to buy with his money, and he’ll only spend the money if he wants it badly enough. Michael will spend his money on anything he sees, even if I would consider it a waste, for example carnival games or cheap trinkets. It annoys my wife and I that he spends too much money on things that have too little value, but I expect that he will develop a sense of value-for-money over time, through trial and error. In the meantime, it’s his own money he’s “making mistakes” with.

This all reminds me of Aristotle’s teaching about the businessman. Aristotle explains that the business of life, or maintaining a household, requires money. Money, he continues, is a tool to be used, much like a craftsman or artist uses tools to create products. In the business of life, the product is comfort or enjoyment, and the tools (money) that are used to create the product are not unlimited. A sculptor or carpenter doesn’t use an unlimited number of tools, but is able to produce an unlimited amount of variety with the small number of tools he or she uses.

In a similar way, a person who is creating a comfortable or even luxurious life does not need more than a certain amount of money. In fact, they could determine when they have enough money to provide sufficient food, clothing, shelter and other wants. On the other hand, if the goal is to get wealth, there is no limit. However, money in itself provides no particular usefulness or enjoyment.

In my own life, I set a goal for the amount of money I wanted to accumulate. I see money as a means to providing for the needs and wants of my family, and beyond that having declining usefulness. If I were to spend more time earning money, I would have less time to enjoy my family and the things that our money provides: food, travel and fun. But money doesn’t give meaning to my life; it’s the things that make my life meaningful that dictate how I choose to spend my money.

Have you determined a set amount of money that will allow you to achieve your goals? If not, how will you know when you have enough?

One thought on “What is Money Worth?”

  1. The goal in my head it simply to have enough assets to generate around 40-50K of cash flow a year, and paying off all of my debts. At this point, increased earnings will cease to have a lot of potential for me!

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