Will Having Money Change You?

It’s something we’re all hoping for: acquiring enough money that we can do whatever we want, whenever we want. Having the level of wealth necessary that we no longer need to work, being able to spend our time doing what we want (and only what we want). In short, becoming rich.

When most of us imagine becoming rich, though, we generally don’t picture those riches changing us. We’ll still be us, we think, but we’ll just have a lot more money. We look at those people who are currently wealthy, see how they behave, and think we’ll never act like that.

As just one example, we see ourselves never enjoying yachting

But as Finance Fox notes, earning money can have plenty of unforeseen effects. Couples who go from nearly nothing to more money than they could possibly spend can find their marriages become much stronger, or wind up falling apart. People who build up a seven-figure net worth can find themselves wanting even more, and when we read about those persons who have a huge net worth, a range of emotions runs through us, ranging from envy and admiration to anger and hatred. How does simple pieces of paper (or more often nowadays, bits in a computer program) have such profound effects on our emotions?

Why Money Affects Us So Deeply

If I can get a bit philosophical here, I think the reason money has such a tight hold on our emotions is that it’s not simply a means of exchange. While in theory money is just a way for me to get rid of two cows and obtain four goats without having to find someone willing to make that exact exchange, in practice, it’s much more. In the real world, it’s a signal of how much society appreciates you, and a sign of the amount of power you possess.

In our modern world, money is THE sign of power and influence. Whereas our ancestors would have used anything from elaborate feathers to gold as signals of the power and abilities of the most impressive tribe members, now all such signs have been replaced by money. The highest earning members of our society are those that society as a whole has considers most deserving, and the easiest and surest way to gain power in the world is to gain more money.

This is one reason why some high net worth individuals draw so much more ire than others; if money is how our society rewards the deserving, then seeing people who clearly do not deserve such rewards receive them anyway sets our internal sense of fairness spinning. This is why the trust fund babies of the world, your Paris Hilton and your Nicole Richie, set so many people’s blood boiling, as they seem to be enjoying rewards far beyond what they deserve. It’s also why you’ll find plenty of people who consider the wages earned by actors and other media personalities (those who benefit from the Superstar Effect) to be completely out of sync with the benefits they add to the world.

It’s also why it’s generally better to earn money slowly and patiently, without a sudden drastic increase in your net worth. As the Financial Samurai notes, those people who earn money quickly and without due amounts of effort on their parts can frequently find themselves overwhelmed by all that they have, to say nothing of finding themselves the subject of envy by their peers. It’s generally not a good place to find yourself.

Lack of Money Isn’t Great, Either

All of that said, though, it’s not exactly fun to be on the other end of the income scale. I’m not going to claim to be poor, or anything like that; between Sondra’s two jobs, my grad school work, and this very blog, we brought in over thirty thousand last year, putting us pretty close to average when it comes to our income level. There are plenty of people who live on much less than we do, many with children to support already and even more health issues than those currently inflicting me. I’m thankful for what I have.

That said, trying to pay for my education, my near grad school living arrangements, and everything else I need to finish my schooling without having to take any of Sondra’s money (which goes to paying for all the expenses around our house and saving for our soon to be born baby) leaves me with fairly little money left.  That, in turn, definitely affects how I think, in spite of how much I might like to believe otherwise. When I see advertisements for ‘make money now’ type systems, even ones that I know are clearly scams, I find myself oddly tempted to buy them. I spend more time considering payday loans and other horrible monetary offers than I used to, even before I spent years writing about how bad they are for this blog. A lack of money, in short, makes it much more likely that I, if I didn’t know better, would have done some profoundly stupid things with my money by now (even more stupid than letting my credit card debt build up and taking out tens of thousands of dollars more in student loans).

How Money Affects Us

In short, the amount of money you have, or don’t have, will affect how you view your money issues, those with money, and even money itself. How fast you earn that money can further influence both how you see money, and how others see your monetary success. Being aware of how your mind’s view of money is influenced by your net worth is important in order to try to keep a level-headed, balanced view of money and how you should use in your life.

How do you think your own net worth affects your view of money? Do you think that those who start with low levels of money and build up their wealth have a better view of money than those who were born into wealth? Do you think the rich or the poor have a better perspective on money?

8 Responses to Will Having Money Change You?

  1. Having enough money takes a little pressure off me. The other side is I could lose it all. I expect to retire again in 5 years and I want to fee secure that I will have enough for the next 30 years. So I keep saving and investing to reach a bigger goal.
    krantcents´s last blog post ..What Should You Do?

  2. Giving the poor and rich experience in how the other side of the scale lives would definitely be a good goal, Josh; of course, I think that the poor would enjoy the experience more… 😉

    Krantcents, it sounds like you’re doing a pretty good job of preparing for retirement. There are quite a few emotions that come into play when planning your monetary future, and it seems like you are doing a decent job of handling them.

  3. I think your hypothesis is backwards. I would argue that it is your mindset that influences your net worth more than your net worth that influences your mind set. This borders on chicken and the egg territory but a clear distinction can be made. If you have a rational, unemotional approach to money management it will change your net worth in a positive manner regardless of whether you are starting out poor, rich, or in between. If you can’t handle a credit card and compulsively spend more than you earn your net worth is going to drop regardless of what level it is currently at. If given the choice between increasing my net worth 10 fold today or doing it over the next thirty years I’ll take the today option. I would then work on taking that pile and making it even bigger. Wouldn’t any rational actor do the same?
    Dave @ 6400 Personal Finance´s last blog post ..Hope Is Not A Course Of Action

  4. Dave, you raise some interesting points. Your mindset is certainly capable of influencing your net worth, although I’d argue that your net worth (and your income, which is more of what I was looking at in this article) are also capable of influencing your mindset toward money. If I was trying to break this chicken-and-egg conundrum, I’d probably argue that your upbringing has the biggest influence of all. If you were taught to manage your money well, invest, and grow your net worth, you’ll do so as best you can, regardless of what net worth you start at; if you weren’t taught good money-management skills, you’ll likely watch as your net worth declines.

    I do think you raise an interesting point about ‘a rational, unemotional approach to money management’. I’d argue that most people aren’t nearly so rational, and if they suddenly found themselves with a ten-fold increase in their net worth, their response would not be to try to increase it a further ten-fold, but to spend ten times as much as they have (if not more) and wind up with a lower net worth than they had before. I think the ‘rational actors’ in the world are greatly outnumbered by those who let the amount of money they have available (or worse, the amount of credit they are offered) affect their saving, spending, and other money management habits for the worse. (And in the interest of full disclosure, I will admit to not being the most rational when it comes to how I manage money, myself, as my own currently negative net worth will attest.)

  5. Interesting view, Sam. That’s the argument that many people make, that as your income increases, the value of each additional dollar becomes less and less. Having the freedom to do as you want, though, is definitely much more valuable (although let’s be honest, having a decent amount of money helps a lot in that category).

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