As the founder of a profitable software company, I happen to make more money than most office-goers of my age. There’s no shame or pride in admitting that. I don’t dislike money. Having quite a bit of it is simply a fact. Though there must be many thousands of people who have enormously more money than me, I consider myself lucky to have more than I need right now.

However, more than the money, what fascinates me is the nature of money, its ubiquity and how our behavior gets unknowingly influenced by it.

The insecurities attached with the money

I have grown up in a typical middle-class household where one is rightly nurtured into not being extravagant. I was taught to value money (which I thoroughly appreciate). Even though, in my childhood, I always got whatever I wanted, the truth is that I never wanted big, expensive toys. That attitude has lingered on to the present day. Now I know what matters and what doesn’t. I firmly believe that material possessions may end up owning my life rather than I owning them. I would certainly be not happier if the entire day I worry about my new scratch-less Porsche, my next investment or whether my portfolio is currently showing positive or negative returns.

A life spent mostly hoarding money and possessions is a wasted life

Keeping the things you own in a good condition and actively managing and cleaning them is one aspect. The other aspect is the constant worry of losing it all.

Isn’t it funny that one first works hard to earn some money, and then worries constantly about not having it anymore? This insecurity keeps even the richest people actively working to make even more money, while they sweat away their only life, working extremely hard while deprioritizing their friends / families (which of course they will regret at their deathbeds). All this hard work is for the future, though. When will this future arrive, they don’t know. With enough money in the bank, they will feel safe. Except that rarely anyone defines “enough” and no body ever is really safe. A bus could run over you tomorrow, and no amount money could save you if you were destined to die.

It’s true that having money is a good thing, and that if you happen to afford good (and probably expensive) medical treatment, chances of you surviving a crash might be higher. However, I can bet that this life-saving amount would be much lesser than what most people aspire for to “save”. And there’s always medical and disability insurance to take care of this scenario.

Then why do we run after money?

I feel there is an irrational attraction which humans have for security. They are inherent afraid of their mortality and subconsciously or otherwise, will do anything that assures them of a meaningful, comfortable existence. Money is perhaps the best proxy for this permanence that we desire. It might also be related to our evolutionary instinct of hoarding food for the rainy days. Better to have more food than less food, right?

Luxury lifestyle and the hedonic adaptation

People who make a lot of money too soon such as entrepreneurs or lottery winners usually end up increasing their standard of living. Consider how going to expensive restaurants, watching movies on a bigger TVs, or moving into a larger home would make you happy only for a while. After that initial rush, it’s back to normal. This is called hedonic adaptation and I’m sure as we reflect, we can see that this adaptation has happened many times with us, yet we keep falling into its trap.

Some might argue that even the initial rush is worth all the money, but there are many unintended side affects of significantly changing your standard of living. You end up not hanging out with your friends that often because they won’t go into that expensive restaurant. You end up spending a lot of time managing whatever things you’ve bought. You end up feeling bad about yourself because now your comparison is with houses much bigger than yours. But worst of all is that you end up feeling out-of-place at all the places that your earlier avatar once considered luxury, say an economy class airline ticket to Europe because now you prefer traveling business class.

Isn’t it ironic that just because you’re used to a better standard of life, you’ve suddenly excluded so many potential joy-bearing experiences? Sadly, some people never experience this non-correlation between money and happiness, and they end up dedicating their lives to making money while they could have had been much more happy chasing experiences. Money in the bank has rarely given anyone any happiness. All it has given is a false sense of security.

Is money such a bad deal?

I’m not saying that money is inherently bad and that we should keep away from it. Even though the swiss are considering giving money to all its citizens who are alive, some amount of money is absolutely required to stay alive. I’m also not parodying all the poor people in the world who simply struggle to make their ends meet. My point is a subtle one:

After a certain, basic amount that is required for a reasonable daily life, unless put to its rightful use, the extra money could end up consuming one’s life and make one actually less happy than before.

Freedom: the only luxury that extra money affords

Freedom is very important to everyone. The freedom to do whatever one wants, wherever one wants (within moral limits, I hope). The only, legitimate use of money is to be able to say no to things you don’t want to do and yes to things which feel out of reach.

For instance, without money, it is not possible to go on an adventure trip to Antarctica. But that trip may not happen if you’re busy making even more money or busy managing your existing stash. And, although it might be true that certain people just get kicks out of making money, science definitely tells us that certain things make us predictably more happy than others. So people who are irrationally attracted to hoard are just victims of uninformed biases.

Yes, I know that life has no real meaning and that worrying about time running out is futile, but happiness is real and being happy is more important than not being happy. If we make a mathematical model containing life expectancy and value of life, each passing moment of our life would seem to be infinitely more valuable. Then, why not prioritize life over money and recognize that the true value of money is in actually letting us design a happier life which consists of varied experiences, many of which (sadly) cannot be had without money. (One of such experiences is helping needy people. Science tells us that it is an easy way to “buy” happiness.)

In nutshell:

We must constantly question what money really is for because, by default, it has some magical properties of animating most of our non-retrievable waking hours. Let money not guide you.

(PS: A note on managing money. It’s odd when I see people sweating over which investments to make. Typical methods of calculating “returns on investment” tend to forget the cost of our anxiety in deciding and the cost of time spent analyzing, managing and maintaining that investment. Is that extra percent of returns really worth it if you couldn’t sleep even for a single day worrying about whether it was the right decision?)