Interesting NY Times article from a couple years ago -- "Net Worth, Self-Worth and How We Look at Money."
It gives a brief summary of an academic paper that found four basic patterns around money:
1. Money avoidance
2. Money worship
3. Money status
4. Money vigilance
The first was avoiding money by being worried about its negative effects, or thinking it's dirty to have. People with money avoidance tend to have low incomes, low net worths, and are young.
Money worship means people think that money will solve all their problems, which has its own negative effects. While these people get wealthier (obviously), it places a lot of personal self-worth on having money and leads to risky and neurotic behavior.
Money as status comes in even worse -- people feeling the need to earn to prove themselves and show off status, which ironically often leads to bad anti-prosperous decisions. This style places the most self-worth on net worth and monetary activities, and leads to lots of risky behavior and trying to put on shows of status.
The final is "money vigilance," who are wary of spending and don't talk about what they earn much. They experience higher levels of anxiety about money, but yet the study found these people are the only ones who didn't majorly suffer from their pattern around money.
An interesting study with some interesting effects. Questions to think over -- how much do you tie your self-worth to financial prosperity, vs. living your values, friendship, and doing good in the world? Are you vigilant about your money? Do you want others to love you for it?
Worth thinking through. Might be hard questions to think over. Getting money and keeping a big chunk of it (and using the rest to power a meaningful life) is a great thing, but pegging money to your self-worth, self-evaluation, and status is a dangerous game. So is thinking money can solve all life's problems.
What's your pattern around money?
cut costs, earn more (and invest), optimize your flow of money, (Ramit Sethi's C.E.O. strategy), then just don't think about money at all. and focus entirely on "living your values, friendship, and doing good in the world'
I'm a bit more money worship than I'd like to be right now. I'd like to think that it's vigilance, but really that's backwards rationalization. When you've just started taking on responsibilities and bills to pay, it feels like such a constraint that you go and say, "Shit, if I had just xxxx dollars, I'll be fine." And you think to yourself, that's not money worship, that's being realistic. But take the bullshit rationalizations away from it, and you're not objectively seeing money as this proxy to wealth, you're worshipping it. You make it important because it means freedom to you.
Money to me is just a means to reach my ends, i don't see why i should avoid it, worship it or be vigilant about it. I don't have any issue talking about money, but i know many people do in my culture group (western europe).
If I have a goal like "taking 2 weeks of vacations next summer" i'll think of how much money i need to reach this goal, but that's about it.
Or if I see my paycheck, i'll may be think of new goals, new things i need, how much goes in daily spending, and how much i'll save.
Raising your own status with money might be a goal, but if you think "money" is a goal in itself, you are probably going to regret things in a while.
I'd like to add a category to this from my own experience as a high school student and throughout most of college:
This could overlap with any of the categories except the fourth, since the "Money Vigilance" profile shows some awareness about one's income and spending.
Follow-up question: What are the important factors that differentiate someone who uses money to their long-term benefit without "Major Suffering?" Is it attitude, education, discipline, motive, or something else?
Vigilance. I like to wear nice clothes that show I'm OK, but I don't do bling out (so neither avoidance, status or worship). I judge how well I'm doing career-wise and competence-wise against my peers and expect that to be validated by my paycheque. Overall I've been very lucky, lucky enough that I don't usually specifically worry about it, yet I don't want to make a dumb mistake, lose it all and have to start over again. Vigilance is the proper posture regarding an asset that has taken irreplaceable years to build up and puts food and water on your plate.
There should be a fifth one, money enlightenment.
And maybe a zeroth for people who just don't place much weight on it but haven't given it much thought either, ie natural carefree people.
I don't think I neatly fall into any of those categories. I tend to live frugally most of the time and save up large amounts of money for fun and exciting things like over seas trips. But I always keep a large cash buffer. I grew up in really extreme poverty and I'm not ever going to get there again.
I feel like Noah and I balance one another really well. I feel emotionally compelled to be frugal and make money stretch as far as possible and because I am a good money manager he feels compelled to work harder to give me more money. He doesn't like seeing me do without fun things in service of long term goals so he tries to earn more money to make up for my frugality. It's a wonderful virtuous cycle and our mortgage is evaporating quickly. :) So I kind of sound money vigilant only I post periodic updates on my blog about our spending. http://www.krissygibbs.com/2013/01/01/show-me-the-money/ See, very detailed. :)
Also- only frugal in comparison to people in my tax bracket. We spend a lot.
Do I want people to love me for having money? No. But I do "treat" people pretty often. I know I have more disposable money than most people I know. I usually choose not to spend money on things which means I have a large buffer. I know most of my friends don't have a buffer.
"There is nothing either good or bad, but thinking makes it so." - From Shakespeare's Hamlet
I think about that quote a lot. Everything has many, many effects and side effects.
Things happen. Then we assign value to them. Sometimes our assigned values are wrong, as we see later. The worst moment of your life leads to breakthroughs. The large gains lead to arrogance and ruin you.
Nothing good or bad? Maybe a stretch. Worth thinking about, though.
1. I have enough. there are some people in this world who have more, but also plenty with less.
2. If I want more than I have now to achieve big goals, I can figure out a way to get it.
3. Every dollar is a choice. How I earn it and spend it are up to me.
From page 7 of All the Money in the World: What the Happiest People Know About Getting and Spending.