The Role of Money in our Life

Squir - hwr

When it comes to our finances, each of us has our own individual approach. Some of us are savers, some are spenders, and others are somewhere in between.   This continuum is a paradigm that our popular culture uses to frame differences in the way people approach money.

I believe that the way we approach our finances goes beyond that particular behavioral characteristic. In reality, I think our approach to finances can be viewed in more of a multi-dimensional setting, where money has a different role in each our lives. For some, money means survival, plain and simple. For others, money is something that is a part of their lives but rarely on their mind, regardless of the role it actually plays. For yet others, money is an obsession, as accumulation signifies achievement. Some people view money as analogous to insurance, or a defensive resource to protect against future setbacks. Some people want money to provide a good home….or to contribute to the ability to have certain hobbies….or to provide something to bequeath to future generations….and so on.  Sometimes the same person may view money differently in different situations. The bottom line is that we each have our own relationship with money, and our own conscious and subconscious needs for money, rooted in our value systems and cumulative life experiences.

This is an area of personal finance that has interested me for a while. Why do people behave the way they do with respect to their money? What’s driving this behavior?

Of course, a starting point for anybody is to consider how you personally view things. Taking an introspective approach, I have spent time figuring out my own take on money, and the role it plays in my life. What I have determined is that for me, it fits into a framework that includes the following elements: Health, Wealth, and Relationships. These are linked together as a part of a system.

Think about it: HWR – Health, Wealth, Relationships. They’re all connected, and to the extent one is strengthened, the others will be strengthened as well. If one is weakened, the others will be weakened as well.

For example, lets take 2 people: A and B.  They are twins. A has good health, average wealth, and good relationships. B has good health, average wealth, and poor relationships. Over time, all other things being equal, I think that A will end up having a better overall quality of life.  My reasoning is that A’s good relationships will be good for his happiness and will lower his stress levels compared to B, which will give A a chance to be healthier. As A is healthier, he will have a better chance to be wealthier, as he will be able to in better position to earn money while having lower health care expenses. And while he is healthier, he in turn will be in a better position to cultivate, keep, and grow relationships, leading to better chances to be wealthy, etc. Circular, perhaps…yet very symbiotic.

So to me, money is a part of the Wealth aspect of HWR. Beyond basic survival, money gives you the opportunity to live a healthier life, with the time and means to have more positive relationships. One thing I want to make clear is that I am not saying that money buys friends. Well, it could, but those aren’t true friends. What I am saying is that the more money you have, on balance, the less stressed you are about it, and the more time you have to do other things, such as cultivate true, genuine relationships that aren’t based on money. Money is but a component in the system.

Of course, there is no right or wrong framework, each of us has our own specific one, whether we have consciously thought about it or not. Yours might be entirely different than mine.

It would be interesting to get everyone’s perspectives on the role of money in our lives, in relation to other aspects. What do you think?

Note: I originally posted this piece very soon after Squirrelers was launched. Given the blog’s increased readership, I wanted to revise the post a bit and revisit this topic to get everyone’s thoughts


  1. says

    Good observations, Squirrelers. If money can’t buy you happiness, it can at least buy you time (or *is* time, depending on context) that can be spent on relationships and healthier living, with less stress.

    • Squirrelers says

      101C – Money may not be able to buy happiness, but it sure helps with making it easier to focus on better health and time for relationships. Time is key, as you suggest.

  2. says

    Interesting perspective. I look at it a little differently; I don’t see wealth as an equal partner to health and relationships. Wealth (money) is only a tool that gives you the ability to live on your own terms — to a greater extent as you build wealth — and your ability to live life on your own terms (and foster things like health and relationships) drives happiness.

    • Squirrelers says

      Flexo – Equally interesting perspective you have. I can see where you’re going with it, and I can agree with much of the spirit of it. For me, health and relationships are more important than money. I want to be healthy, and I want fulfilling relationships. Money is a tool to allow us to get there, but it’s important. Without any money, we’re not going to have the time/energy/resources to focus as much on health and relationships. We’ll be working long hours, eating whatever’s available…focusing on survival. With more money, we can focus on what’s most important – health and relationships. Of course, being healthy puts one in a position to make more money than if unhealthy, which can impact relationships and time spent on them, etc….so really these elements are interrelated.

  3. says

    The key is to find the right balance. Find out the weakest link and work on improving it while maintaining the sustainability of the other two areas.

    Great post, simple graphic!

  4. says

    I agree with Flexo’s analysis of wealth’s place in the equation. I think the problem is that a lot of people feel the same way, but then focus on the lack of wealth as the ‘root’ issue that is holding back the ability to live a good life – allowing one to focus on health and relationships. So, we choose to foster and nurture our relationships and health as much as possible – where ever our finances may be at that time. Although we are trying to increase wealth, it has to remain behind the scenes as a tool, it can not be the focus that the other factors teeter on.

    • Squirrelers says

      NW Journey – really, I suspect that it’s health and relationships that most feel to be of critical importance….and really what make life so great. One can certainly have really good health and really good relationships without much financial means, I have seen this first hand. I can totally agree with that. I suspect, however, that without money stresses, this becomes a higher likelhood of happening.

  5. says

    I love triangle theories!
    I went through a few years where I was acquiring more wealth (a better job, a raise). My health and quality of life was improved because of the better health insurance and benefits. My wealth was not increasing because I was spending as fast as I was making it. My spending did not shift when more money came my way. I did not create a savings account or retirement during this time. I knew something was out of whack.

    • Squirrelers says

      Molly – yes, there’s balance within the money component as well! Can’t spend more than you earn, no doubt about that! Then, the stress will pile up and quality of life will go down.

    • Squirrelers says

      Crystal – great example, well said. Money allows you to focus on things near and dear….such as relationships. Doesn’t buy them, but lets you focus more.

  6. says

    This reminds me of Maslow’s hierarchy of needs. It’s hard to look at developing relationships when one’s basic needs are being met. I think money is the key to getting past that “basic needs” phase. Depending on one’s upbringing, I think it alters whether people have money in the forefront or background. I think if you’ve been in a position of never being without the basics, it’s a lot easier to just have money working in the background as a tool without giving much more thought to it. Then there are the depression era folks who knew the hardship of what it’s like without money, so the prospect of losing it is terrifying and suddenly it races to the forefront of one’s life.

    I’m glad you reposted this. It’s a great article.

    • Squirrelers says

      FirstGen – thanks, I’m glad it resonated with you. When I first posted it, this blog was so new that there couldn’t have been many people that even knew about it. So, I wanted to share it now that the blog has many great readers. As to your points, you make some really good ones about how people’s own financial histories can influence money’s role. I can see how folks who went through such tough situations can really value money as important in a way that others might not. Money isn’t always just lurking in the background as a given, so to speak.

  7. says

    I’d have to say that balance is the key to prosperity. I haven’t analyzed my relationship with money; I’m still working on that whole balancing act myself. But I do know that being healthy, having strong relationships with friends and family, and making sure I’m not constantly stressed out about money is a good mix.

    I like how First Gen threw in Maslow’s hierarchy – taking an academic approach!

    • Squirrelers says

      Little House – I too liked that academic comparison. As for your point about stress, that’s a big part of it in my view. With money, there’s more time to focus on relationships and health, and less compromises made. Not always of course, but there is more of an opportunity for that….which can lead to less stress in many ways.

  8. says

    I’ve thought of a similar pyramid too, except my three categories for an optimal life are: physical, mental and social. All three are required in near equal proportions for an optimally balanced life!

    I say optimally balanced life because one can have a subpar balanced life too, so that’s why I would like to optimize my three areas of the triangle.

    • Squirrelers says

      Money Reasons – I like your point on balance that’s suboptimal. That’s an interesting comment, and can be applied to my triangle of health, wealth, and relationships as well. Once can have an equilibrium of all of these, but they can be settling for a mediocre life. From that mediocre life (a terse/highly subjective way to put it, admittedly, but work with me here), if one then improves health, for example, it opens up hope and opportunity in other areas.

  9. says

    Money buys you choices! It does not mean you will make good choices! Most people who have money problems end up with other problems such as marriage or relationship issues. Poor people make really bad choices regarding health mostly due to lack of money.

    • Squirrelers says

      krantcents – yes, true that it doesn’t make people make good choices. One just needs to see the stories of superstar athletes who went bankrupt. They had health, wealth….who knows about real relationships, but they had a few things really going for them. And then, once the wealth disappears, the other problems emerge. Also, to your point about poor people making bad choices, I think that’s true sometimes but not all the time. Sometimes so, because of lack of alternatives (ex – eating junk food if no time to cook or no grocery stores around). Other times no, because they have learned from painful experiences and know what doesn’t work and want to better themselves.

  10. says

    There’s an interesting story in Henry Hazlitt’s “Economics in one lesson”. There’s a couple of brothers who inherit a fortune from their departed father; one takes the money and spends it out on the town, on expensive cars, clothes, apartments, etc… and everyone loves him for it. The second brother is much more frugal with his money, spending only some of it, while investing and saving the rest. He is despised by the others as a miserly scrooge.

    As time goes on, the first brother eventually exhausts his supply of money and ends up broke, and all of his former friends desert him. The second brother’s savings and investments, while not being as conspicuous as the first brother’s spending, nonetheless help the economy just the same, and as his investments grow, his spending grows, too. Eventually, his spending surpasses the first brother’s, but he got there by building on real savings, rather than eating all of his stored nuts.

    I believe that the lesson here is similar: money won’t buy you friends or happiness, but proper management of it can certainly give you much more ability to improve life for yourself and loved ones, and help out others at the same time by providing the economy with much-needed savings.

    • Squirrelers says

      Kevin, that’s an interesting story. Yes, money doesn’t buy true friends, agree totally. I think that having it allows one to focus on things other than money itself, which can allow for real friendships to develop and grow, and health to improve. Make sense that when one has time to invest in health and friendships, they will be more likely to grow than when there’s no time available.

  11. says

    Interesting article. I do think money helps enhance your health and your relationships. But along the same lines, good health helps enhance your financial situation and your relationships, and good relations help keep you happy and healthy and can help you make clear (smart) financial decisions. Basically, the three need to be kept in balance.

    • Squirrelers says

      Budget Confidential – I agree that the three should be kept in balance. As at high of a level as feasible, of course!

  12. says

    I would have to agree that everything is interconnected in life. I think that proper money management will help the other things fall into place much easier – for instance, if you were able to properly manage your money, you wouldnt be worried about money all the time, or working at a 2nd job to increase your cashflow. You would be at peace with how much you earned and spent, and would be comfortable spending some amount to maintain your relationships (dinners out, movies, a festival/fair or something of the like).

    • Squirrelers says

      Jeff – That’s key, in my view – the interconnectedness of things. It’s all a system, in many ways. Balance, and improving our weak links is important.

  13. says

    Money equals security to me. Not just security to have a roof over my head, but I guess security to live the life I want. My idea situation would be to live comfortably, and to also to help others the way I would like. I have always dreamed of seeing someone who looked down and out at McDonalds or wherever and just give them 100 dollars without even blinking an eye. I would like to have the freedom of time to volunteer and perhaps tutor. There is so much freedom that money can provide, so I guess money now equals freedom and security to me now that I type this!

    • Squirrelers says

      Everyday Tips – I know what you mean, and think you said it well. Money can lead to the security to live life the way you want it too. Also, totally cool how you want to have more freedom to practice such random acts of kindness and generosity.

  14. says

    I think that money has been many of the things you mention to me at one time or another. Right now it probably plays the role of insurance most, plus acting as a tool to help me do other things (like taking trips with my family.)

  15. Shahid says

    We all are talking about money as inherited or money already there in our account at least to meet our basic needs and what should we do next? earn more money or to strike a balance between three elements mentioned in the triangle.
    Actual point is if you do not have money but you have health and probably a relationship as well, how much money you need to continue to have good health and relationship. I think no body has talked about CONTENTMENT. When we focus on earning money definitely we are losing focus on health and relationship. what’s the point of having millions of dollars in your account when you need sleeping pill every night before you go to bed and you never had time to spent with your wife/girlfriend and kids. When need rest and time with our family every day. we can not just say that have money first and then we will concentrate on health and relationship. one thing I am certain of is there is no upper and lower limit of money you should have before you can be stress free. My grand parents were very poor and there only bothered about the money which could provide them and their family basic food for the day they woke up into just like birds and they lived above 100years. Long story short, how much money we suppose to have in our saving account before we truly can say I am not bothered about money and now I can spend some time with my wife/girlfriend and kids and the activities I like. Remember we only get to live ONCE.

  16. says

    Great post, I view money as a way to 1- assist me in having saftey net, 2- assist me in making money on top of money, 3- Finally to have something that I can gift in life and the after.

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