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 characterstic. 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, regarless of the role it actually plays. For yet others, money is an obsession, as accumulation signifies achievment. 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 it fits into the framework of HWR – Health, Wealth, and Relationships. These are 3 key parts of life, 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 healhier. 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 healthcare 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.
There is no right or wrong framework, each of us has our own specific one, whether we have consciously thought about it or not. It would be interesting to get the perspectives of a range of folks to see the different views of money in all of our lives.
This post was included in the Carnival of Personal Finance #249 at Amateur Asset Allocator