The Limited Significance of Your Money: Exploring its True Value
There are only four things you can do with your money: pay taxes, spend it, invest it, or give it away. That’s it. Not very exciting, is it.
What is important, is how you use your money to get the life you want. So let’s dive into these uses.
1. Pay Your Taxes
This is a good idea if you want to stay out of prison. Of course, you should take advantage of every part of the tax code to lower your taxes as much as possible over your lifetime (not just this year), but at the end of the day you are going to use some of your money to pay your taxes.
Income tax, sales tax, payroll tax – it goes on and on. So, let’s be strategic to control our tax burden, but this is definitely a big use for your money so let’s admit it here.
2. Spend Your Money
Now, we are talking! You can spend it on things you need and things you want. I guess you could spend it on things you don’t need and don’t want, but that won’t make you very happy.
Many people are tempted to split their spending between wants and needs, but I don’t really see the point of that. It’s unlikely that you will ever need to only spend money on your needs and things you define as “needs” today may drop off your list should a real financial challenge arise.
Instead, let’s focus on aligning our spending with our values. In other words, make sure you are getting appropriate value out of every dollar you spend. This starts with knowing exactly how you are spending your money, so we need a way to track our spending.
3. Invest Your Money
Now this one is interesting because the reason you would invest your money is so that you can spend it and the money it earns in the future. In other words, if you invest your money, the goal is to be able to spend even more money in the future.
So, when you think about it, investing your money is just spending it in the future!
4. Give Your Money Away
There are a lot of tax benefits for giving money away, but they never offset the actual money you give away. In other words, you must actually want to give your money away for this to make sense. The tax benefits only mean that the government will help support your giving (if it’s to a qualified entity like a charity or church), by offsetting some of your income for tax purposes.
So, that’s it. Your money is only good for four things: taxes, spending, investing, and giving.