What is the value of money?
That sounds like a very strange question, doesn’t it? Many people will respond that the value of money is based on the amount printed on a bill (paper money) or the amount minted on a coin.
Isn’t the real value of money based on how you use it and what you spend it on?
Let’s say that Joanne buys a blouse for $50 at a boutique. Amanda buys the same blouse on sale and a printed scarf for $45 at a different boutique down the street. It’s apparent that Amanda’s money has more value than Joanne’s because she got more for her money.
Money is nothing more than a means (tool) to have access to what you need or reasonably want. Understanding this truth is critical in realizing the importance money should have — or not have — in your life.
Another aspect to consider is that the value of money will depend on the stage of life you are in. Money is important to you as a young adult raising a family, buying a house and saving for your children’s education. During this stage of life, there never seems to be enough money. Hence, money is always on your mind.
Money will typically mean less to an elderly adult who is in the autumn of their life and are enjoying the fruit of having lived a frugal life in which wise spending and saving were an important part of their way of life. During this stage of life for the prudent person, money consumes very little of their concerns or attention.
Hence, the real value of money is having enough of it so you don’t have to worry about financial issues … ever. You can get to this point by:
- Living a simple life
- Frugally spending your money
- Saving and investing faithfully and frequently
- Being super stingy about taking on debt other than a mortgage
As a retired longtime saver, I spend very little time thinking about money. Money is simply the means to pay my frugal living expenses and health care. In fact, my retirement income is far more than I need to live on. As a result, over 30% of my retirement income is put into savings each month.
I wish that I had devoted far less time in my earning years worrying about money. I now see that there are many more important things in life than money.
My wife and I are American expats living in Ecuador, South America — a developing country. One of the life lessons we’ve learned here is that money has nothing to do with happiness. The peasants are among the happiest people you’ll find in the world. This truth humbles us frequently.