At some point in your life, you’ve probably stopped to think for a moment about whether or not money is all that important.

I’m sure we can think of numerous examples in which someone has said words to the effect of ‘money is the route of all evil’ or that ‘you don’t need money to be happy’.

The truth is, whether we like it or not, money is very important for several reasons and today exactly what those reasons are.

What Is Money?

According to Investpedia, money is defined as an item or medium of exchange that represents a perceived value.  In other words,  it allows businesses and individuals to buy goods/services to maintain a certain standard of living/quality of life.

Although there has been an emergence of other forms of value storage/exchange in recent years (cryptocurrency etc), fiat money is still the most universally accepted form of payment.

Before money as we know it today, such a thing as bartering used to exist which is simply the act of trading an item for something else. However, before the time of currency, payment could be in the form of pretty much anything.

For example, if you had fruit but wanted to purchase some meat, you would trade the fruit in exchange for it. The issue with this means of exchange is that it may be that the other party does not want the items you have. Once more, you may have differing ideas about just how much fruit should be traded in exchange for the meat.

Money as we know it today doesn’t sound all that bad now does it in comparison?

Is Money Important?

In today’s interconnected world, money is essential. On a basic level, it puts clothes on our backs and food on the table but going one step beyond that, it can be a source of freedom to spend time doing things that matter to us most. This looks different for everyone but common examples include:

• Spending more time with family
• Travelling the world
• Pursuing our dreams and aspirations (whatever they may be)

If you find yourself making little money, your ability to do these things is forever limited because you’ll be trading your time to cover your overheads. On the flip side, if you are modestly wealthy your capacity to do these things is greatly improved as money can free up time.

Does Money Buy Happiness?

Yes and no.

When we make or receive money, we get a positive chemical reaction that releases dopamine which will leave us feeling happy. Just think about it, if you won the lottery would you be upset? Of course not, you’d be over the moon.

However, that doesn’t mean to say you’ll always feel that way. Money can certainly serve as a tool to give you better outcomes, options and opportunities but the hits of dopamine do not last forever. Therefore money will not bring you long-lasting happiness on its own- that will come from a combination of other things.

Money Is A Tool

You may often find money compared to a tool, one with which if you use it correctly, can reap the rewards. As we touched on earlier money is a medium of exchange, designed to flow in the direction of larger quantities of money. That’s why the highest-paying jobs are connected to larger, more concentrated pools of funds. It’s the law of attraction, money attracts money.

If you can position yourself in a job that benefits from being close to large sums of money and then go and take that money to invest- you’re on the right track. By investing you’re allowing your money to make more money for you. This can take on many different forms such as:

• Investing in starting your own business
• Investing in stocks and shares
• Investing in asset classes like property

It’s people with wealth that understand and apply this principle consistently every day to improve their financial situation. Conversely, people who are unaware of this principle tend to be poorer which goes hand in hand with having a negative overall view of money.

The Negative Impact of Wealth

Although the pursuit of money can pave the way for great things, it can also lead you down a path you’d rather avoid. Just like everything, too much of something can be detrimental to yourself and those around you. Negative impacts of wealth include:

• Obsession– To value the importance of money is one thing, but to be obsessed with it is another. If someone has an obsession with money, it would mean that every decision that make will always come back to that person’s financial situation and its potential impact. It’s not hard to see how centring your life around money will effect yourself and those close to you negatively.
• Superficiality/materialism– Having access to more money might mean you can buy the latest car and hop on the latest fashion trends, but often this may be at the expense of appreciating the more simple things in life.
• Feeling of superiority- I’m sure we have found ourselves in a situation in which we are talking to someone who comes across that they are better than everyone else simply because of their financial success.
• Paranoia- Acquiring great wealth oftentimes is extremely difficult and will test your character repeatedly. It’s therefore not hard to see how after acquiring that wealth, you’d be extremely paranoid about losing/maintaining it.

Therefore the key is to always maintain a sense of balance between acquiring wealth and all the other things that are important to you in life. Always remember that you do not need to sacrifice everything that you have to be financially free.

Key Takeaways

This is why money is important:

• Money controls many aspects of our lives
• It is a tool, which when used correctly, does the ‘heaving lifting’ only requiring us to guide it
• Money can give you more freedom to do what you want

How important is money to you:

• The two factors that decide are your beliefs about money and your current financial situation.
• Have a positive belief system around money
• Stray away from the negativity surrounding money
• Financial literacy and education are key to success

Conclusion On Why Is Money Important

Why is money important? Because it governs many aspects of our lives. To get ahead we need to accept this and invest in knowledge that will allow us to use money correctly.

When it comes to how important is money, it comes down to you. Not just your current financial situation but your beliefs about money. If you care too little, your bank account will suffer.

If you care too much, then this can hinder your progress and impact those you care about negatively. So a happy medium seems the best stance to take.

If you enjoyed this post on why is money important, then check out some of my making money online posts. Make sure to leave a comment if you have any thoughts on this post!