Money is a tool, not a goal, end state or life-defining attribute

Money, money, money. It’s the central theme of endless songs, movies, and books. It’s dreamed about and lusted after. For some, it’s a status symbol and sign of “success”. Because society places such a high value on money, we also believe it will bring us happiness.

However, the reality is that money isn’t an end in itself; rather, it’s a means to an end. Money doesn’t buy us happiness, as the acquisition of stuff is ultimately transitory and our wants are never sated. We’ll always want more and so chase the unobtainable. Rather than resulting in a happier life, the focus on money and materialism is the root cause of great misery and dissatisfaction for many people.

Despite knowing this to be true, over the last year I’ve been increasingly caught in the golden net of money, the tractor beam of cash and the siren call of affluence. I’ve been thinking about it more, reading about it more, seeking to gain more, save more and invest more. Admittedly it hasn’t been to chase status or wealth for wealth’s sake but rather in the pursuit of financial independence and freedom. I think, though, that I may have become a bit obsessed with money and the accumulation of assets. Looking at my allocation of time, too much of it has been spent in the pursuit of money or learning how to optimize it better.

Money is after all only a tool and one aspect of life. Money can’t buy happiness, but my actions over the last 12 months suggest I’m a believer in that myth.

Inverted priorities and a sign of imbalance

We are taught from a young age to pursue money. Study hard, so you can get into a good university, so you can get a high paying job. This lucrative career will let you buy the houses, cars, holidays and lifestyle of your dreams. The harder you work, the more you can get. This is turn will make you happy!

The truth is you are simply exchanging your precious time for money and possessions, both of which are ultimately unfulfilling. The hope of buying your way to happiness via money is silly and misguided.

With money as a priority, other aspects of life are reprioritized, forgotten or discarded entirely. Important things like health, relationships, creative pursuits, gratitude, family, self-development, travel, and spirituality.

A focus on money can easily lead to major imbalances and misplaced priorities. If instead, it is viewed as a tool, or device, that aids us in accomplishing a task or goal, rather than being the goal itself, we can reframe our perspectives and relationship with money.

How much is enough?

Multiple studies show that after a certain point money doesn’t add to happiness. Essentially once our basic needs are met, earning more is subject to the law of diminishing returns. Hedonic adaptation means you quickly become used to the new standard of living and the fulfilled wants are quickly replaced by new ones.

Apparently, the optimal income is around $75,000. Money earned in excess of this amount has relatively less impact on your happiness. Clearly, this will differ slightly for each individual, by geography and other factors, but it is illustrative and important to highlight.

The upshot is that earning more money after a certain point, has no noticeable impact on how you’ll feel on a day-to-day basis. The sacrifices are not worth the returns. Spending your life in the office isn’t the secret to a well-lived and fulfilling life.

Can we talk about something else?

I’ve no doubt that finding the Financial Independence community has been life altering. The common-sense formula of “spend less than you earn and invest the difference” and Mr Money Mustache’s shockingly simple math behind early retirement, feel like fundamental truths. I’m now much more conscious about my spending and finances as a result. Engaging with the FI and Personal Finance community has been brilliant and I’ve learned so much in a short amount of time.

However, sometimes the FI movement can feel like it has a one-track focus and over emphasises money-related topics. There are endless opportunities to deep-dive into themes like budgeting, frugality, tax optimization and investing. What’s your FI number? What’s your savings rate? What side-hustles can you explore to increase your income? How to negotiate better pay? 101 ways to cut expenses! The list goes on and on, and I’ve been deep down the FI rabbit hole.

I don’t want to be overly critical here as the information out there is incredibly useful. I’ve also been equally guilty of producing lots of wealth accumulation and money focused content on the Simple Life Compass blog.

The conflict that I’m struggling with is that timeless conundrum that surely there is more to life than money. There are some notable exceptions like The Fioneers, advocating making the journey as remarkable as the destination with their Slow FI philosophy. Others like Tanja Hester, in her book “Work Optional: Retire Early the Non-Penny-Pinching Way”, stress the need to define, design and live the life you want to lead and offer tips on how to thrive in that work optional life. These are the topics and discussions I wish we were having more of.

Pay attention but not too much

It is important to pay attention to your finances, but there does need to be a degree of balance and moderation in this process. Money can’t and shouldn’t be your No.1 priority in life. It isn’t a gauge of success or the secret to a life of happiness and fulfillment. We need to look elsewhere for that and lose our obsession with money. Focus your attention on the more important things in life.

Thanks for reading

Mr Simple Life


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9 thoughts on “Money is a tool, not a goal, end state or life-defining attribute

  1. I wonder if this is an experience most people who are chasing FI encounter?

    When you’re first learning about it, and beginning to understand that it is possible to achieve, it’s exciting. It’s motivating and invigorating aiming to have the highest savings rate possible, the fewest expenses possible, and complete control/grasp of your spreadsheets. It use to keep me up at night, in a good way. Eventually I think the obsessiveness can turn detrimental.

    It’s like a honey-mooning period. The feeling wears off and things can turn pretty negative if you slip up in a month and watch your savings rate decline. Or, if you can’t seem to lock down a side hustle to increase your income it can start to feel like you’re “doing it wrong.” I’m not exactly sure how to explain it…but at one point I noticed it was having negative effects on me and my family life so I “slashed’ my savings rate from nearly 70% to 50%. Still an unbelievably high savings rate, but it still felt like that decision meant I was giving up. Very weird.

    Nice post.

    Liked by 2 people

  2. Guilty! I constantly need to remind myself of what Ramit Sethi calls ‘living outside the spreadsheet’. FI has been a great educational influence in my life with money (something they don’t teach you, seemingly on purpose) but there have been several instances I needed perspective on ‘chasing’ the accumulation mindset and always thinking of money to take a step back and assess priorities.

    Also, the $75K ‘benchmark’ is interesting to have a number out there according to research. That is uniquely higher or lower to everyone (I would encourage it to be lower). Great read!

    Liked by 2 people

  3. You’re spot on Mr. Simple Life. Knowing what your number is can be hard to determine. If you overshoot, you’ve traded away too many hours of freedom that you will never get back. Undershoot and you’ll at some point regret the decision. Careful reflect and honesty with whether adding more to our accounts was worth the price going forward. It wasn’t – and I’m now happily retired. This pursuit should be directional not all time consuming. Learning and expanding your FI knowledge should be considered a hobby and put in its proper place in one’s life.

    Liked by 2 people

  4. Awesome post! It’s interesting that you say that 75000 is the optimal…..And then what? After you reach that goal? Which means happiness isn’t in money….it’s in you…!

    Liked by 1 person

    • I don’t think happiness is ever found in money but the research suggests once you’ve met your the basic requirements that there is a diminishing return in earning more. For most of us we are trading our time for money so you have to question when enough is enough. I agree happiness ultimately has to be internal and won’t be found in external events, things or money

      Liked by 1 person

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