THE LIMITS OF MONEY

“Money, if it does not bring you happiness, will at least help you be miserable in comfort.”

– Helen Gurley Brown

Do people think they can guide their lives by the pursuit of money?

Apparently, they do. The pursuit of money is now the main priority of Americans, according to a recent poll conducted by the Wall Street Journal. According to the same survey, values like patriotism, faith, and having children are declining as priorities. Money is the undisputed number one.

As a personal finance blog writer, I feel that you need to understand money management. But it is not everything.

Where does the money-centric approach to life fall short? To answer that, I have looked hard at six primary life goals: love, status, winning, etc., and what money can and cannot do to further those goals. Then, I summarize what money cannot do and determine where the over-reliance on money can leave gaps in our lives. Finally, I discuss what to do about it.

LIFE GOAL NO.1: LOVE

Everyone wants love, but it is elusive, hard to find–and even harder to define. Yet, we strive for love. And for most people, it is a primary life goal.

Context/Definition

The definition of love has been debated forever. But, a significant component of love is the exchange of respect, affection, cooperation, and trust between people, typically in a long-term relationship.

What you can buy

Money does not hurt when pursuing love, but it is not everything.

Money can give you a better chance to gain the interest of a significant other.

For example, many studies have shown that women consider a potential mate’s net worth. Men are primarily evaluating women on looks. Neither consideration makes success a guarantee as people look for love.

And, let’s face it, for those concerned about appearance, spending money can make you look better. Whether cosmetics or plastic surgery, looking better is a big business. Phylis Diller once said about plastic surgery, “I saw what’s going on under my chin. I don’t want to be the one the president has to pardon on Thanksgiving.”

Money may also give you more options for meeting potential mates. It allows you to dress well and present yourself in the best possible light.

Finally, money is helpful to keep a relationship together since money and money management are significant sources of friction for many couples in long-term relationships.

What you cannot buy

You cannot purchase the ability to connect with a love interest or family member.

As Warren Buffett put it so well, “I know people who have a lot of money, and they get testimonial dinners, and they get hospital wings named after them. But the truth is that nobody in the world loves them… If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster.”

And he added, “The problem with love is that it’s not for sale… The only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.” (Alice Schroeder, author of The Snowball: Warren Buffett and the Business of Life).

LIFE GOAL NO. 2: POWER

Money IS power. And it feels good to have control of your life and the ability to influence what happens to you.

Many people also crave being leaders who get to tell others what to do. They love it because power is the opposite of helplessness, and it is a basic need that is especially important to them.

Context

Power is the ability to have others do what you want them to. It is also about having the ability to influence events. However, when individuals exercise power, it is a one-way interaction with others: I tell you what to do, and you do it.

What you can buy

Having more power than other people is often a significant motivator. For many, it is the most important thing, even more than money.

However, the pursuit of money and power are usually intertwined.

For instance, large political donations are a way of influencing policy. Moreover, you can argue that it can buy advocacy to get what you want. The bigger the donation, the more likely you will be successful.

What you cannot buy

Power and voluntary compliance don’t always go together. Voluntary compliance must be earned because of love and respect or because the complying person does not disagree.

Nor does money matter in some power situations. For instance, no matter how much power anyone has, they cannot influence the weather or cure an incurable disease.

Just keep the donations legal.

LIFE GOAL NO. 3: ATTENTION/IMPORTANCE/STATUS

No one wants to be ignored. And it is good for most people’s egos if others admire or even envy them. Money certainly helps in that regard.

Context

Status is a characteristic that comes from the perception of others. Others must believe that you are wealthy and successful to achieve status.

Perception of status is usually based on expensive homes, jewelry, automobiles, club memberships, designer clothes, jets, yachts, etc. Sometimes, it is based on powerful associations. The envy of people less fortunate often goes hand in hand with status.

What you can buy

Money can buy status.

What you cannot buy

The kind of non-monetary status that comes from beliefs, creeds, and actions cannot be purchased with money. For instance, moral status is not for sale, nor is the respect of others.

We have seen how that works lately. For example, before the Ukraine war, there seemed to be an ongoing contest among Russian oligarchs regarding who had the most opulent yacht. Status seemed to come from being able to fund superyachts and proving that ‘mine is bigger than yours.’

Since the war started, the sanctions and path of the conflict have changed from envy to contempt among Westerners and a lack of status for oligarchs despite their wealth.

LIFE GOAL NO. 4: FREEDOM/INDEPENDENCE

Having the option to do different things is a crucial component of freedom. More generally, freedom can also mean that you are answerable to few people, often none.

Context

Charlie Munger once said: “Like Warren (Buffett), I had a considerable passion to get rich, not because I wanted Ferraris – I wanted the independence. I desperately wanted it.”

And why? It is usually because people do not want to be controlled by others (especially by bosses with less talent).

The desire to have freedom is how some people are wired. They work best that way, too.

For instance, Munger helped make a fortune for his family because his financial independence allowed him to concentrate on what he does best: pick investment opportunities.

What you can buy

With enough money, you can do many things independent of the control or oversight of others. For instance, if you are rich enough, you do not have to rely on a bank loan to buy a house, so you can buy it outright without providing dozens of financial documents to apply for a loan.

In this case, the bank is no longer your partner in a purchase. And you do not have to produce what seems like at least 100 of your personal financial documents to get approval.

So, freedom allows for the ability to do things and act without oversight. And it often keeps things simple.

What you cannot buy

The freedom to choose from many options does not guarantee you will make the best choice. It cannot buy wisdom or self-control.

LIFE GOAL NO. 5: TRIUMPH/WINNING

Context

Everyone likes to win and feel competent. There is nothing like mastering a skill, meeting a challenge, and emerging triumphant.

But we are slightly obsessed with the notion writ large. In one recent case, one pundit has challenged the competence and worthiness of those not in the one percent. Winners are competent. Losers, who make under $400,000 per year, are not.

As I have pointed out, that kind of silly thinking is flawed. You can read about that here.

Nonetheless, feeling triumphant and competent is a worthy life goal.

What you can buy

Using money as a yardstick is one way of measuring success because it can make comparisons between people easy.

Still, that is an incomplete, shallow view of success. I do not consider fabulously wealthy people whose lives are dominated by dysfunctional personal relationships as successful. Of course, I am not speaking of one family or individual.

More relevant to this discussion is when you win a competition. For example, you are winning first place at the art contest, getting promoted, or coming in first in the 5k run. Competition is a way of determining if you are the best.

Goal achievement is another way of feeling competent. For example, achieving a goal like college graduation is a competence and confidence booster.

What you cannot buy

Not all success is based on 1) competition, 2) achieving a goal, or 3) comparison.

When success is based on these three components, the bigger question is: Are any of these three components relevant to your self-worth and what you are evaluating? If they are not, then they do not matter.

For instance, if you have no interest in competing, does it matter if you decide not to enter an art contest? Or if there is a goal you don’t pursue because it has no value to you, does that somehow count against your self-worth? I have no intention of competing in marathons. Does that make me an inferior, unfulfilled person?

 Finally, if you are not comparing yourself to others, do you care how your old car looks, for instance? What matters most to you is whether it is safe and reliable.

All of this is directly relevant to the poll results we discussed previously. For instance, when we talk about declining values such as patriotism and faith, those are usually values of belonging to groups with similar interests. They do not directly involve any of the factors I noted.

LIFE GOAL NO. 6: SAFETY/HEALTH

Is there anything more important than your health? I cannot think of many things.

Context

We all want to feel safe. Being healthy enhances your sense of well-being, too.

What you can buy

Money is often used for personal well-being. Money means choices: where and what kind of real estate you buy, what food you eat, and how you live.

For instance, wealthier people live in less polluted neighborhoods and have more green open spaces for recreation and exercise. They tend to spend the most on their health care. Therefore, according to one study, the wealthiest men live about 15 years longer than the poorest men, and the most affluent women live about 10 years longer than the most impoverished women.

What you cannot buy

Having options to deal with health or other issues does not mean you have enough self-control to take advantage. Failure to exercise, eat healthy, etc., can come back to bite you.

SOME CONCLUSIONS

Here is what we have learned that cannot be bought:

• Love– the exchange of respect, affection, cooperation, and trust in a long-term relationship
• The voluntary compliance of others
• The kind of non-monetary status that comes from your beliefs, creeds, and actions.
• A guarantee that you will make the best independent choices or achieve wisdom or self-control.
• The ability to achieve a sense of belonging
• Self-control to take advantage of activities that benefit you and your health.

Notice that the things you cannot buy relate primarily to 1) actions toward others and 2) internal self-control.

If there is a weakness to the “money is the most important priority” logic, it is that reliance on money can compensate for being too individualistic and isolated. It appears that reliance on money means many people don’t reach out to others as much and seek their counsel less.

Generally, we feel less anchored to over-arching causes like faith and patriotism and more focused on ourselves. Those traditional values, whether you hold them or not, involve the community and the vision of the community.

Focusing on money not only does not replace traditional values, but it also indicates that we may be more vulnerable as a group if we don’t have the good sense to reach out to others, consider different points of view, and develop/value our sense of community and self-control.

Money and its management are a good thing. But it does not solve every problem, or fulfill every need, and never will.

Disclaimer: consult with a financial fiduciary before taking any steps outlined here. Not all advice may be suitable for your circumstances or investment style.

Image: Alexander Grey

License: Unsplash