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Money is a Servant to Your Life, Not Its Master

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It has been often said that money is a wonderful servant, but a horrible master. While each individual boasts a different definition of financial success, people that treat money as a servant to their life tend to enjoy a much higher degree of happiness and satisfaction.

Money itself is a dull, lifeless, man-made creation with zero utility. However, because we have assigned it a value, we can use it to purchase things and experiences throughout our lifetimes. But we must not confuse the pursuit of money with the pursuit of happiness. The inherent value of money is not money. Instead, it lies in what it allows you to experience, whether that is a great meal, a trip to Bora Bora, the freedom to do whatever you love to do, or the feeling you get when you give to someone in need.

In his book, Your Money and Your Brain, Jason Zweig explores the time-honored phrase that money cannot buy you happiness in reverse: can happiness buy money? He writes that “happen and happiness come from the same Old English root word, and happy people seem to make good things happen more often.” Because money is so intertwined in everything we do and experience in our lives, it is imperative that we make an effort to position our financial lives and use our money in a manner that increases the likelihood of good things happening.

Before pursuing any particular financial strategies, we must first recognize that there is an interior and exterior element to our financial lives. The exterior component deals with what is traditionally thought of as financial planning. It involves raw data, facts, analysis, calculations, projections, tactics and strategies. The exterior component is easy to see because it is quantifiable and visible.

The interior component is very qualitative in nature and often resides in the subconscious. People often struggle with or ignore this element when discussing money because it is far more complicated. You cannot see it nor calculate it, and it tends to get very messy when differing forces collide.

The interior component involves everything that impacts our sense of happiness: our morals and values, religious and political beliefs, our communities, family life, cultural norms, work life, health, education, etc. The interior forms the essence of who we are and who we want to be. If we can consciously deploy our financial resources in a manner that aligns with our interior self, we will derive a much greater sense of balance and happiness in our lives.

Every financial decision requires a delicate balancing act between the interior and exterior elements. Most people acknowledge this when they aren’t in the heat of the moment. However, the mathematical (exterior) component is much easier to analyze and calculate, so we often defer to it at the expense of the more important side of the equation.

Further complicating things, human beings are inherently terrible at forecasting the future. We have a remarkable capacity for painting an incredibly clear picture of how a story is going to unfold by simply layering in some details we want to believe. The more details we include (regardless of accuracy), the more realistic it seems. This is an amazing gift we have been given for storytelling purposes. However, every detail we layer into the increasingly vivid story we are telling ourselves (or being told) also increases our feeling of safety and reduces our ability to sense threats.

The mathematics of personal finance is important, but it is also a trap. Often times, the option that should theoretically yield the better financial result (that which results in more money) is not the right financial decision to make for you and your family. Other times, something that seems like a great financial decision for your family (ie. moving to a nicer neighborhood or taking a better paying job) impacts you in ways far beyond the money.

In moving to a new neighborhood, families often struggle with the transition from being relatively wealthy in the old neighborhood to relatively poor in the new one. In addition, you have new neighbors, new friends and your kids are attending a new school with new classmates. They may have been very gifted in their old school, but only average in the new one. If they play sports, there are new social and financial pressures on the kids and parents to adjust to.

None of these are inherently good or bad, but are every bit as important as money to consider and weight appropriately in the decision making process. Some families adjust and adapt well. Others don’t. But there is a lot more to the happiness equation than simply assuming you will be living the same life in a nicer home.

Your lifestyle must lead your decisions, but that is often misrepresented as an excuse to spend everything you can today. Expensive lifestyles require more retirement savings and more insurance protection. Mastering your personal finances requires a balancing act resulting in you always being in control and having the ability to manage your way through any of life’s uncertainties.



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