What is the Purpose of Money?

We trade our time and efforts for it, so what is the purpose of money? The general purpose of money as a tool is to make trading of goods and services easier and more efficient. But on a personal level we each have our own reasons for going to work or investing or doing business to make a profit. Here’s a look at some of those purposes.

Survival

For many people the purpose of money and their pursuit of it is a simple matter of survival. That’s how we feed and cloth ourselves in a modern society, after all. Of course, if you look closely you realize that in nations that are well-developed economically people choose to earn much more than is necessary for survival. Even health doesn’t really require more than a few dozen square feet of indoor space and a few dollars of food daily. Nobody can honestly claim that they want money only for survival as long as there are others all around them that live in less space and eat more economically.

Comfort

Surviving in comfort might be the next level of purpose. That can mean better mattresses and other furniture, and some tastier foods. On the other hand, there doesn’t seem to be any end to this accumulation of “better things” other than the limits of our wallets. This despite the lack of much evidence for there being more comfort in a super expensive car versus a merely expensive one, or a table becoming more pleasant to use if it costs twenty times as much as another already expensive one. So although comfort is certainly one of the purposes for most of us, but there is more to it than that.

Identity

We all have an ego, an invented self that we unfortunately identify with more than we should. Part of that process of creation includes owning certain things that help us build that ego-self. Even if we were alone in the world we might have this urge. Thus we identify with anything from a favorite spear to a new home, and value these beyond any objective functional value they have in bettering our lives. Of course, because we live in the modern world we have to buy these things with money. And money itself – having a lot of it – becomes a part of this identity as well.

To Impress Others

We want to impress others with our things so we can feel that ego-self more palpably. This is part of why we buy cars that are more than just what we need for transportation, and even things that we don’t need at all. Today in most cultures, money is one of the easiest ways to win the approval of others.

To Control

Obviously money helps you control your surroundings, which gets us back to survival and comfort. But it also gives you power over other people in direct and indirect ways. Notice how those with less money get out of the way of those with more, and how well rich people are treated by those who stand to inherit their wealth. We can directly pay people to do most of the things we might want, but there are also many subtle games played that are aimed at control and involve money.

Freedom

We have many desires and goals. We also all face an unpredictable future full of many possibilities both welcomed and feared. Money not only helps us fulfill desires and reach our goals, but it can provide the power to deal with most of the potential future scenarios. In other words, it can give us a kind of freedom in terms of our actions and possibilities in the world. I cover this important purpose of money in detail on the page What Does Financial Freedom Mean?

Spiritual Growth

It is often assumed that money gets in the way of spiritual growth, or what some real might call real or internal freedom. But it’s all about how you use it. Spiritual teachers – even those offering real value – will sometimes claim that money has nothing to do with your “self work,” but they will tell you that in a book or seminar that you had to pay for. If you believe that spiritual growth can take some work and time, well, money sure buys the latter. And although it may be easy to say that enlightenment is possible at all times, it seems that most of us need to get past fighting for survival before we can take the time reflect on higher truths.

The Many Specifics

What is the purpose of money? The answers above address some of the personal purposes in general. Then there are the specific purposes that are unique to each of us. These range from getting back to one’s home country to see loved ones to establishing a new college endowment fund to buying the next best video game. Of course if we accept that the ultimate purpose is to make our lives better, then all of these lesser goals have to be measured against that.

What Does Financial Freedom Mean to You?

When you hear the expression “financial freedom,” you might think of having unlimited money, or at least enough money for all the things you want to have. A more modest definition is having enough money and/or assets to provide a lifetime income at a level which provides a comfortable life. In other words, you have enough so you no longer need to think about making money if you choose not to.

That sounds good to me! That kind of financial freedom certainly has its appeal. But this short essay is not about that – at least not only about that. I have a broader concept of financial freedom, in which money buys not only more money, but more actual freedom of choice in most areas of life. In other words, the use of money to provide more freedom, and not just the freedom from needing more.

Buying Freedom

First of all, there is freedom and there is freedom and … well you get the point. There is more than one kind. The kind that is internal, the freeing of one’s self from the ego and the nonsense that is created in our minds – that one will be left for another time, and perhaps another website. Money only helps with that as far it can buy some good lessons and time to reflect on higher truths (but it can at least do that).

There is also a kind of freedom that is about what you can get and do in this world. Your options are limited in any country if you can’t pay the rent to get off the street and into an apartment. Health too, can be improved greatly with the wise application of money, starting with better foods. The more money you have the more options you have to buy all kinds of goods and services, meaning the more freedom you have of this type.

Then there is political freedom. That is certainly something that can be bought with money. Just ask anyone who has used what money they have to escape an oppressive regime and move to a freer country. And that’s just on a personal level. Money also can be used to promote the ideals of freedom in the political sphere.

Many times the various types of freedom are mixed in a given circumstance, and yet are all enhanced with money. For example, if you have enough money, you can afford to buy an illegal drug that will help with your glaucoma or diminish the side effects of chemotherapy. That same money helps protect you from legal persecution by governments, because you can afford a good attorney or you can move to a place where your actions are legal.

Financial Freedom
Expanding the Possible Through the Careful Use of Money

The example above hints at the approach you might want to consider if you want your money to create more freedom in all areas of your life. It is to look at what you really value and finding ways to arrange things so that you can continue to pursue and enjoy those values. Money can be a great help here.

Beyond having money in the bank or in investments so you can buy things in the future, why not use it to buy circumstances and surroundings and options conducive to maintaining your highest worldly values? A second passport, for example, along with a residence in that second country, allows you to avoid economic or political upheavals that might limit your freedom. A second identity allows you to blog about whatever you want in whatever country, without facing repercussions from oppressive political regimes.

The requirements for freedom (in its widest context) are necessarily different for each of us. If you want to speak the truth at all times but doing so will hurt the value of your company, it may be time to sell out and find a better way to create an income. If you have been unfairly targeted for prosecution for a crime you didn’t commit, you might need to arrange to have your wealth abroad and to be able to travel. If you just want to be free of family drama your money can put some distance between you and your loved (but irritating) ones.

If you want to write a novel but the time spent managing your money prevents it, you don’t have the kind of financial freedom that I’m talking about. The point is that freedom from a job is not the only important value here. Why not give some thought to how to use your money to provide more of all the aspects of freedom that matter to you?

What is the Purpose and Function of Money?

The following is a quick look at the purpose and function of money in general. The more specific purposes that it has for us as individuals will be looked at on another page.

The first half of the question has relatively simple answer. The purpose of money – the reason it was invented or developed – is to facilitate the exchange of values between people. Barter, the basic trading of things and services, is a very limited and cumbersome method of exchange. The chair you just built might be worth 100 tomatoes, so how do you trade it to get just one or two for dinner?

These basic problems with barter have been looked at many times before. But what is perhaps even less understood is how important money is to the growth of wealth. Wealth is not money, after all, but the things which actually enrich our lives, such as indoor plumbing, cars, books and restaurants. Barter is so limited, in fact, that most technological innovations are almost unthinkable without the development of some kind of currency system. Could we have a computer if we didn’t have money? This is where we get into the function of money.

How Money Works

Consider for a moment how difficult it would be to make a car if there was no money. In order to build a large factory to produce automobiles, you would have to either enslave people or first have something to trade for their labor (yes, all agreeing to cooperate is possible, but unlikely). There is no efficient way to borrow wealth when currencies don’t exist, so you would have to gather together food, wood, or whatever people wanted in order to trade that for their help. You might get together with others and pool your resources, but any way you look at this, it could take years just to create the building for the factory.

Tires, plastic knobs, tools? Assuming these things existed in a world without money, how do you trade for them? And if you could ever get a car built, how would you trade them for what you want? Put customers on the eighty-five tomatoes, four pounds of cheese and fifteen chickens per month plan? It is clear that money makes much more wealth creation possible, and though we can argue about what has value, if we can agree that medical care, enough food for health and a roof over our heads are all good things, then we can see the importance of money.

Money is not just a means of exchange, though. It is also a store of value for the individual, family or even society. Trade a house for 25,000 pounds of food and you have to worry about spoilage destroying much of what you gain. But with money safely tucked away in the bank from the sale of a house, you can hold onto your wealth and spend it as necessary for whatever needs the future brings.

In it’s simplest form, money could be, and was at times, coin or pieces of paper that represented real things. Gold, for example, has been used as the “backing” for many currencies. But it could be something as simple as a pieces of paper that promised the holders a pound of corn for each one turned it into farmer John. The farmer could have stored some corn and created the paper and then those bills might circulate all over for years before many are traded in for the corn. Carrying fifty bills is much easier than carrying around fifty pounds of corn to trade.

As long as those things that back money are valued, and as long as there is a means to trade the paper bills for those things, money will be accepted by others in exchange for almost anything. But we currently have “fiat currencies” in most nations, meaning money that has no commodities or other valuables directly backing it. It is often said that it only has value because of the trust of the people. However, this isn’t entirely true. Since you have to pay your property taxes and all of your debts with money, you have to get some.

That demand makes money worth something. With trillions in contracts all denominated in dollars, for example, there has to be demand for dollars. And as long as too many are not printed, the value is maintained by that demand despite the lack of physical commodities backing the currency.

Fulfilling Purpose and Function

Money is meant to facilitate trade and that’s meant to serve both sides of the trade – otherwise why would they participate? So the ultimate purpose of money is to make life better. If it doesn’t do that, it is being used incorrectly. That can be true on an individual level or for a whole society.

The function of money meanwhile, requires some faith in its value. If a government destroys that by printing too much money it interferes with or destroys the proper functioning. If it determines what prices are paid for things, instead of that being decides by participants in any exchange (the market), it also interferes with the function of money. This ultimately has a negative impact on the purpose – the bettering of life.

Car Repossession – How to Avoid It

I have some experience with car repossession, because I was a “repo man” twenty years ago. I got to sneak around in the middle of the night taking what was often a family’s only mode of transportation. I had guns pulled on me, met people who wanted to fight, and many who threatened to call the police (which always made me happy). One particular job that I recall involved a family car in a relatively depressed part of northern Michigan…

The man and his wife were removing the last of their things from the trunk of the car, trying to pry loose a mitten that was frozen to the bottom, so they wouldn’t have to buy another. If people were cooperative we always let them remove personal effects before we towed away the car. Otherwise they had to come to the towing company storage yard, which in this case was 120 miles away.

The children were watching with wide eyes. “Why are they taking our car daddy?” one little girl asked. Without hesitation her father had an answer.

“Because if you can’t pay for it you don’t get to keep it darling.”

What a perfect answer! Taking away people’s cars may seem harsh, but if you don’t get to go take a car from someone without paying, why would you get to keep one you don’t pay for just because you have been using it? It isn’t really “your” car until it is paid for after all. that should be common sense, as it was to this man.

Before You Buy a Car Read This

Some of you may be reading this page because you are behind on your payments and facing a car repossession. What should you do? I’ll get to that, but first I want to start with what to do when buying a car in the first place.

Buy for cash and you don’t have to worry about the repo man coming in the night. There is rarely a good reason to borrow money to buy a car. When I was younger friends would tell me that they needed a new car, and that they could afford the $500 monthly cost of the payment and insurance. I asked them why they weren’t setting aside $500 each month in savings if they had that kind of excess income. Soon they would have enough to pay cash for a great reliable used car, with no debt hanging over them.

I also pointed out that 40% of millionaires buy used cars. Why? They understand that a three or four year-old auto still has most of it’s life ahead and looks almost new, yet costs only half what a new car does. And they pay cash.

If you think you have no way to save the $3,000 necessary to get a decent used car, you have problems that won’t be resolved by borrowing $15,000 for a new car. For now, buy a $500 car. You might think you’ll pay a lot for repairs, but even the worst clunkers don’t average as much in repairs each month as a large new car payment costs.

Avoiding Car Repossession

We once repossessed a car that was worth perhaps $6,000 and the owner only owed $800 on it. What a shame! Even if he later settled up he now had to pay an extra $500 in fees for the repossession.

When I was employed as a bill collector I had to collect $7,000 from a woman who had her car repossessed years before. The car sold cheap, as they usually do off a repo lot, so she still owed $3,000 for the deficiency – the difference between what the lender got and what she owed on the loan. Over the years the interest on that mounted, more than doubling the amount. Yes, in case you missed that, you still owe the money even if they take the car.

The lesson is clear: Don’t let your car get repossessed. Cut your expenses elsewhere to make those payments. It is a bit sad and irresponsible to lose the transportation that gets you to the job that pays the bills, while you still have cable television and weekly pizza nights.

Now, it’s worth noting that banks often never collect in cases like that one, so they really don’t like to repossess a vehicle. With that in mind, always go to your lender and explain your situation if you are having trouble with the payments. They may be able to defer payments if you will be going to work soon, for example. Or they might be able to waive the late fees if you can get back on track with payments. It’s also possible that they can refinance the car with lower payments.

If you really can’t afford the car, you need to get out long before it is repossessed. Sell it if it is worth more than you owe, and then find something cheap to drive. This will save your credit score as well. If you owe more than the value of the car, go to the lender and turn it in voluntarily. This saves them the expense that they would incur from a car repossession – an expense that will be added to what you owe.

Above all, learn your lessons. They are expensive ones after all, so make them pay. Don’t buy what you can’t afford, have a contingency plan for making payments if your job is lost, stay out of debt to begin with. Car repossession is rarely something that has nothing to do with your decisions.

Family Loans and Cosigning a Loan

There are some who will tell you that family loans are just a bad idea all around. However, it is really a matter of the particular family and what is expected. For example, in my own family, loans are expected to be repaid – period. Because of this it is not a big deal to bring up a late payment or other issues. Interest is charged and usually at a rate which at least replaces the income that would have been made if the money stayed in the bank.

On the other hand, there are families that consider it rude to expect or talk about repayment of a loan, or to charge interest. In these cases, why call it a loan if it is clearly a gift? In fact, even if it is repaid, but without interest, it is a gift of the interest lost (or what the borrower would have normally paid a bank). This kind of dishonesty generates bad feelings. If a gift is asked for, call it that.

Apart from the nasty relationship problems that can arise from family loans, there are the tax issues to consider. If you loan larger amounts, like the money for a down payment or to buy a car, the Internal revenue Service will likely assume an “imputed interest” rate, even if the loan is interest free. .In other words, you may get the money back, but in the meantime pay taxes on the assumed interest collected. If you prepare and efile taxes yourself, make sure to talk to a tax preparer or accountant about this.

Cosigning a Loan

Some parents or brothers or sisters help their children or siblings by way of “loaning” their good credit in the form of cosigning on a loan. Is that a good idea? Almost never. A son or sister or daughter or brother only needs you to cosign because a bank has determined he or she is too risky to loan money to. Lenders are better than you at determining these things than you – really.

In addition to the credit risk of cosigning, which I’ll get into in more detail in a moment, there is the real risk that you won’t actually help your loved one. For example, more often than not, when parents help a child by cosigning on a car loan they just help him or her into a debt that may last beyond the life of the automobile. Debt for consumer items is a bad habit that we shouldn’t help others develop. “Helping” friends and family into more stress and trouble is all too common.

What about your credit rating risk? When you cosign a loan you are legally obligated to to pay if the borrower defaults. That much you probably understand, but you may not know that in many states the law doesn’t require creditors to notify a cosigner if the borrower is late on payments. In that case you not only become liable for the debt, but you also get a black mark on your credit report before you even know there is a default or late payment.

Assuming there is a good reason to help a family member, here are three safer ways to use instead of cosigning a loan:

1. Put up collateral for a loan.

Deposit the amount of the loan in an interest-bearing account and let the borrower use it as collateral for a loan if your bank or theirs permits this. Of course you’ll lose the money if your family member doesn’t make the payments – you’re on the hook for the whole amount if you cosign anyhow. But this way your credit rating won’t be affected, since your name won’t be on the loan.

2. Lend the money yourself.

Assuming you can afford to lose the money (and if you can’t, why would you ever consider cosigning a loan?) just lend the money yourself. But charge a reasonable interest rate to make up what you lose taking the money out of the bank.

3. Help them establish credit.

To help a son, daughter or other family member establish credit, put them on your credit card, or on a loan that is in your name. They get to build a credit history, but the monthly statements will come directly to you. That way if they are making the payments you’ll know if there is a problem.

With the right money beliefs and relationships family loans can be a great idea. They can help a person start a business, or pay for education or get proper medical care. Just keep it honest and sensible – and protect yourself.

Increase Profits – Twenty Ways

I am always looking for ways to increase profits, as long as they are honest. The following list comes from the ebook You Aren’t Supposed To Know, part of The Secrets Package. There are twenty ways on that list. Ten of them are presented here. If you can apply even two or three of these you’ll probably boost your bottom line significantly.

1. Increase the Average Sale

Boosting the average sale is a powerful way to boost profits without spending money to get new customers. Fast-food places are doing this when they ask you, “Would you like something to drink with your meal?” Look for whatever ways work in your business.

2. Cut Your Costs

This is one of the most basic ways to increase profits in any business. If sales are not affected the money you save goes entirely to your bottom line. For example, if you invest a little in fluorescent light bulbs and save $42 per month on electricity as a result, you make $500 more profit annually. To accomplish that with sales you might have to sell $1,000 to $2,000 more in products or services depending on your margins.

3. Track Advertising Results

You should identify the least expensive ways to get new customers. To do this, track the results of your advertising. If newspaper coupons get you customers cheaper than your mailers. If so, you might do better by dropping the mailings and devoting the money saved to newspaper ads with coupons. Find a way to track results and be skeptical of advertising that doesn’t allow tracking of results.

4. Test Prices

Suppose you sell a product for $40 that costs you $30, and you sell 200 per week. Your gross profit would be $2,000 ($10 x 200). But what if you raise the price to $54, and as a result only sell 120 per week? Your gross profit is $2.880 ($24 x 120), or $880 more, despite selling less. Testing is how you discover the most profitable price.

5. Educate the Customer

Some accountants offer free educational seminars to teach people tax-reduction tricks. Many of those attending become customers of course. Sometimes you have to educate the customer as to why he or she needs your product or service.

6. Sell Your Customer List

My credit union does this now, putting offers from insurance companies and others in the statements I get each month. Sell or rent the list to companies with non-competing products. Let them either get the list or access through your own mailings. But try to add real value for your customer by only allowing relevant offers.

7. Experiment

Look for low-risk ideas can you try to increase customer count or average sales amounts. For example, when working as a manager at a fast food restaurant, I once spent six stamps and an hour to mail invitations out to visiting high school sports teams. I bribed the coach with a free meal, and two bus loads came in the following week. With low risk experiments like this nine out of ten can fail, and you can still increase profits.

8. Get Customers From Failing Businesses

Let’s say you have a snow plowing service and you hear that a competitor is going out of business. You could wait to see if a few of their two hundred customers call you, but why just hope? Instead offer to take over the route and pay the owner $20 for each customer that stays with you for one season.

9. Sublet Space to Another Business

There is an ice cream shop I know of that rents out their lot to Christmas tree vendors in December. I also know of a bakery that was open only in the early morning that rented out the facilities for a pizza parlor that operated each evening. The money you get in this way from non-competing businesses is almost pure profit.

10. Increase the Frequency of Customer Purchases

Making more money from existing customers is almost always cheaper and easier than getting new customers. A carpet cleaning business, for example, could give a discount if a customer has carpet cleaning scheduled automatically for every six months rather than waiting until they think to call.

Should You Do What You Love?

There is a saying that goes something like this; “Do what you love and the money will follow.” It is also the name of a book that was popular for quite a while. But is it true? Sort of. Okay, that’s not a very inspiring answer, but these things are rarely black and white.

In any case, how much of your life do want to spend doing things you hate or that cause you boredom? So even if we rework the saying to “Do what you love and the money might come,” that thought ought to be enough motivation to get you going in the direction of your passions. But let’s look at some research to see how likely this is to work.

Here’s a short excerpt from the book Secrets of Lucky People:

In 1960, psychologist Srully Blotnik set up a study to track the lives of people who wanted to become wealthy. He started with 1,500 people, split into two groups. The first group was the largest, with 1,245 people. These individuals each said that they would try to get rich first, and afterwards would pursue their passions. In other words, they planned to chase after money, hoping that this would someday make it easier to do the things they really wanted to do.

The second group had just 255 people. These individuals all said that they would follow their passions and interests first, and trust that money would come somehow. They shared a “Do what you love and the money will follow” philosophy.

What happened? Twenty years later Blotnik had lost track of a few hundred of the people, as can be expected. Some of them undoubtedly died or had moved and couldn’t be located. But among the remaining people in the two groups, there were 83 millionaires.

Remember that all of the people in both groups said they wanted to be wealthy. These 83 millionaires were evidence that the desire to become wealthy can certainly help. In fact, about 8% of the people he could locate were millionaires, while at the time less than 1% of the general adult population were.

However, the really interesting part of the study is which group those millionaires came from. Of the 83, only one came from the first group, the people who said that they would try to get rich first, and afterwards would pursue their passions. 82 of them came from the smaller second group, the people who said they would follow their passions and interests first, and trust that money would come somehow.

That’s a pretty amazing statistic, isn’t it? 1 out of 1,245 became a millionaire in the first group, versus 82 out of 255 in the second. I’ll do the math for you: This seems to indicate that you are 400 times more likely to become wealthy if you follow your passions rather than chase after money.

Do what you love and the money seems likely to follow. Of course there will be times where you have to do things you don’t want to do, and even times when you have to keep a hated job for a while. I once worked for years at a decent but boring job so I could pay off my first home and save money to travel. I love the business I’m in now — writing about whatever interests me and making money doing it. But I still have tedious tasks that are a part of it.

Many internet marketers will tell you to forget about your passions and create websites on hot topics and high-value keywords. I can tell you that I could never write the thousands of pages and articles I have written if they were about things of no interest to me. I also could never have sustained my motivation during those first six months when my wife and I made almost nothing online if I was creating sites that bored me.

On the other hand, I am blessed with many interests. That has meant that I can afford the time spent on our poetry site that makes forty dollars annually because others that are also based on passions make hundreds of dollars per month each. The lesson in that is perhaps to follow your passions, but start with those that are most likely to make money for you.

Sometimes there may not be a financial reward. For example, I love to play chess, and do so every week at a local coffee house, but it would bore me to tears to write about chess, and I can’t think of any way to make much money playing (I’m not good enough to win big prizes nor willing to study that hard). So do what you love, and if the money doesn’t come, do it anyway and find another way to make money.

Ask and Ye Shall Receive

The biblical advice to “Ask, and ye shall receive,” is meant as a spiritual principle, but it’s also a great principle of negotiation. Asking increases the odds that you’ll receive what you ask for, and almost certainly assures you of greater success if done often enough, but it is no guarantee in a given case. But then, I suppose that “Ask, and you’ll have a higher probability of receiving,” isn’t quite as inspiring. In any case, here is a good example of the idea in action, taken from my book, Secrets of Lucky People.

How to Buy an Island for a 94% Discount

Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you. – Jesus

Asking for things you want is a sure way to have better luck. It is an obvious lesson, right? But then how many of us would have done what Richard Branson did in the following story (this was before he was a billionaire).

Richard Branson and his wife were in the Virgin Islands, looking at small islands for sale. They had no intention of buying one, but their trip was paid for by the real estate company as long as they were looking. It was a way to get a vacation when they were short on cash.

One particular island caught their imaginations, however. It was lush and green, with a lake, and a nice beach. Branson decided that he did want an island after all. He asked about the price, and was told it was three million pounds. He offered 150,000 pounds. The agent repeated the asking price, and Branson said he would pay 200,000 pounds, and no more.
With that, the vacation was over. In fact, their things were abruptly put outside of the hotel room. Offering 93% less than the asking price apparently offended the agent. However, the story didn’t end there.

Later, back in England, Branson found the owner. The man had never even been to the island, and he was very anxious to sell it. Branson offered him 175,000 pounds. The offer was rejected. That still is not the end of the story, however.

Several months later Branson received a call from the owner. He said he would take 180,000 pounds for it. Branson found a way to borrow the money, and he closed the deal. He bought the island for just 6% of the asking price, and 20,000 pounds less than one of his previous offers.

This is the kind of reward you can get for asking. Perhaps at some point someone even thought they would pay 300,000 pounds for the island, but didn’t want to “insult” the owner with such a low offer. You might look like a fool for asking for a 90% discount, right?

But then again, Branson got it even cheaper. Maybe looking like a fool is a risk worth taking for a deal like that. You never know until you ask.

This was an excerpt from Chapter Nineteen of Secrets of Lucky People. How can you get it? Ask and ye shall receive – as long as you have $12.95. It is available from Amazon.com as a paperback, or you can instantly download it as a PDF ebook, along with a bonus book.

You Have No Money?

People often say they have no money. They say it when they are asked about their goals and dreams for the future. They say it when asked about their lack of investments. The say it when they can’t make the rent or pay the bills. Sometimes they are telling the truth.

More often they are telling a partial truth. They may not have much money right at the moment, but the excuse ignores all the money that goes through their hands. Hopefully you don’t make this excuse too often yourself, but if you have ever heard yourself saying you have no money, read on…

Self-Defeating Money Habits

There are very few people in the United States who can honestly say they have no money to set aside for retirement, for their children’s future education, or for their dreams. Many, for example, watch cable television instead of saving money for other things. That’s okay, and is their own business. But it is also true that they choose that $45 monthly expense over the $150,000 it would be at retirement (assuming 40 years of $45 monthly contributions and an 8% return).

And no one has a right to tell a person he should eat a cheaper (and healthier) diet of rice and beans instead of meat, and bank the savings. On the other hand, the money saved would buy a vacation after some amount of time. It is dishonest to deny that these options are real.

When I was young I owned an old mobile home on a lot as an investment. I rented it out to a friend from work for $365 per month. It was an awful place, but it was safe, and there was a need for low income housing in the area. In talking to my friend I discovered that he and his wife made more than enough money to buy a nice house, but didn’t have any money saved for a down payment.

What they did have was pizza. It was delivered three times weekly, at $20 each with tip. I know the specifics because I was not only their landlord, but their pizza delivery guy. It is worth noting that although they thought they had no money to buy a home, I owned a home and a rental unit while making less than $10,000 annually at the time, and they made over $40,000 between them.

In any case, that pizza adds up to over $3,000 per year. Even if they truly valued pizza, they could have eaten frozen pizza instead and saved enough for a down payment within a couple years. This may be an extreme example of poor money habits, but it’s a true story. In fact, there were dozens of other ways they could have cut their expenditures and saved the money instead.

You may think you can’t save, that you have no money to set aside, but there are always ways. Imagine for a moment if you were offered a million dollars to find 20 ways to cut your expenditures. Don’t you think you might find them? So to save for a home or to invest or start a business someday, why not make the list right now? You don’t have to sacrifice too much. Just cut costs on the ten things from the list that matter least to you, and put the money saved in a separate bank account.

Now, isn’t it better to honestly say “I choose not to save,” since that at least acknowledges the option? And we have only looked at the cost-cutting and saving part of the equation. There are probably ways most of us could make more money this week if we are honest about that too. As you might guess, I am skeptical when people say they have no money. You should be too – even when you hear yourself say it.

Do You Think Money Can’t Buy Happiness?

It is common to say that money can’t buy happiness. The truth is not quite so simple, as explained on the page A Look at Money and Happiness. As pointed out there, if curing disease, relieving poverty or building a church can in any way bring any small measure of happiness to people, then money can at the very least help arrange conditions that are conducive to being happy. This page, then, takes a look at the “how.”

How do we use money more wisely? How do we use it to bring about a better life in personal matters and in the world? Another way to look at this is to ask, “What can we do differently to make money actually more valuable?”

Personal Happiness and Money

It has been said in various ways that people’s true intentions are not expressed in words but in how they spend their time, energy and money. Combine that thought with a monthly tracking of every penny spent and some of us might feel a bit depressed about ourselves. But the truth should never be depressing. It is an opportunity to learn and grow.

If, for example, you think that happiness is more likely to be found in good spiritual principles and practices than in having a new car every three years, you can do something about it. Divert just a bit of that money into buying some great books and programs that encourage real spiritual growth. Or if it is time for meditation and reflection that you need, money can buy that too. Spend less on frivolous things and you can afford to take a week at a time off work.

Or perhaps what you need in life right now is better living conditions and healthier foods to eat. Money certainly can buy those. Find ways to make more and be sure to apply those gains to what matters.

Get a notebook and start listing everything you buy for a month or two along with how much you spent. You’ll very likely find that your spending habits don’t entirely match your deepest desires. Why not change that? That notebook contains valuable information you can use to learn about yourself and why you are where you are.

You can argue money can’t buy happiness, but it buys something. What are you buying with yours?

Buying Happiness for Others

Again, we can argue about the definitions of “buy” and “happiness,” but we can also see clearly that we can buy medicine, books, food and clothing. And if we get these things for those who don’t have them, isn’t it also clear that we can make life better in some ways? But how do we use money wisely when spending it on others?

This is not an easy question to answer. Some general principles stand out, of course. For example, it seems that it is wiser to spend money on teaching a man how to fish than in buying fish for him. On the other hand people sometimes need to eat today before they can even have the energy to think about how to feed themselves tomorrow.

Despite a few wise principles we might extract from experience, the question of how to help others is a case-by-case matter. To be honest, I don’t have any decent answers. My own experience is full of examples where I or others have given help that hurt. Give a friend money to get into an apartment, for example, and maybe you just help him into an expense he can’t really afford, leading to bankruptcy.

Then there are the examples on a larger scale. Help a million irresponsible people into mortgages they can’t handle and you don’t cure their irresponsibility – you just make the consequences worse. Lend money to corrupt governments of poor nations and you enslave future generations who must work in poverty to pay those debts.

I have become somewhat skeptical of most of the ways we try to help others with money. It seems that small gifts that show our love might have some value, and that when people are truly changing their ways money can help with that. But in a rich nation full of opportunities money is rarely the thing that people need most. It may be better to help people in other, poorer countries, where we can buy necessary food and education and even economic development.

Maybe money can’t buy happiness for ourselves or others, but there are many things it can buy. Again this suggests that we take a serious look at how we use it.