An interesting aspect of human behavior is how we relate to money. In terms of interesting behavior it rates high on my list, exceeded only by our sexuality and our innate need for spirituality.
I remember money being described in a survey economics class as “nothing more than a medium of exchange.” Even more than thirty years ago, I had difficulty with the concept.
Money is indeed a medium of exchange. It is also a medium for helping to meet our most basic needs of security, power, belonging, freedom and fun.
Our security needs are usually given more weight as we age. It becomes increasingly important to know that we will have an adequate amount of money to provide food, clothing, shelter, and health care throughout our life. Freedom and independence needs also remain high on our needs list. Money helps supply those needs.
Money helps us to meet our basic power needs. Money positions people to be power brokers within their families, communities, state and even the national level. Money empowers us to meet our basic needs of security, belonging, freedom and fun.
Money helps provide the means for that needed sense of belonging. Without our money we could not keep our family unit together. We could not join hunting clubs, social clubs, special interest groups or help support our places of worship that are helpful in meeting those basics needs of belonging.
Money affords us many choices. Where we live, attend school, and play are determined by money. Our freedom need is enhanced by money.
Money buys the material things we enjoy, especially those related to our recreation, hobbies and special interest, thus helping to fulfill our fun needs.
Personal finances remains high on the list of presenting problems for those who seek counseling. Excluding persons who have substandard income, it is interesting to note that there is not a significant difference between the percentage of persons with moderate incomes and high incomes who have money stressors.
Clients having large incomes experience stress related to money. It is not unusual for persons with six figure plus incomes to have a large expensive credit card debt and spend more money than they make.
How can one family meet their basic needs with a modest income while supporting their church and charities and saving money for their future needs?
How can others not meet their basic needs when they have large incomes?
A partial answer is in how we relate to money. If it is only a medium of exchange to us, then we never have enough. However, if we view money as a medium for meeting our basic needs, we treat it differently and become more prudent in its use.
Persons who view money as a medium of exchange tend to think only on terms of increasing the supply of money to alleviate the stress of not having enough money.
Persons who view money as a medium of meeting their basic needs considers both the supply side of money and the spending side. They balance their use of money among basic human needs without over or under spending in any one area. For example, if a person spends too much of their income to meet their Fun needs they will not have enough money to meet the other basic needs in one or more of the other needs of power, security, belonging and feedom. The same principal applies if we overspend in any one area of need.
There are a number of books in print that may help you change how you relate to money. “The 9 Steps to Financial Freedom” by Suze Orman talks about having respect for money. “The Millionaire Next Door” by Stanley/Danko gives us a profile of the increasing number of millionaires in the United States. These new millionaires are likely to be the person living next door in a nice but modest three bedroom home. He owns his own business, continues to invest in his own business, drives an American made automobile or a Ford F150 pick-up truck. He is frugal, buying suits off the rack in a department store and often taking his lunch to work. He has money in the bank to finance his children’s college education. An impact concept for me was taken from a book written by Joseph Dominquez and Vicki Robin, “Your Money or Your Life.” They suggest that we calculate our take home pay and divide that amount by the hours that we spent earning that money. This represents an hour of our life’s energy. Then we evaluate expenditures, not in terms of money, but in terms of life’s energy. Thinking of spending in terms of life’s energy rather than how much money we make is a wonderful concept that is useful in balancing our expenditures among our basic needs.
Perhaps the best general guide is the 10-10-10-70 principle. Save and invest 10% of your income for retirement needs. Save 10% for major purchases, vacations, or unexpected expenses. Give 10% to church, charities or other worthwhile causes. (This is an important 10% because it helps us to respect money and to keep the value of money in perspective.) Learn to live and meet your basic needs with 70% of your income.
Archie King, LPC, is a human resources consultant in Jackson.