What Does Personal Finance Mean To You?

I’ve heard it said (and believe it to be true) than 90% of personal finance is personal, and the other 10% is finance.  To me, this is the problem with all of the geeks with their calculators running numbers instead of getting to the heart of the issue.  There is a lot more to handling money than deciding whether to open up a savings account paying 3% interest over one paying 2%.

I think most of it has to do with one’s perspective of what this abstract idea called money actually is.  For some people, money is “buying power”.  They see money as a measure of the amount of goods and services one has the ability to consume.  I’m at odds with this view of money.  Instead of seeing money as a measure of what I can get, I tend to look at it as a measure of what I don’t have to take.

To me, money is a measure of security and freedom.  The more I have, the less vulnerable I am to unexpected events and the less chance I’ll have to do something I do not want to do.  By spending (consuming goods and services), I am trading the security and freedom I already possess for the item or service.  In a sense, I’ve become less free due to ownership of an object.  Tyler Durden said it best in “Fight Club”, “The things you own end up owning you.”

Not to say that being a complete miser is best either.  I think there’s a healthy balance you can achieve by spending on things you really love (travel for me) while being thrifty when it comes to things that aren’t so important to you (cars, boats, etc).

I believe the “security and freedom” view of money works best for me.  Those who view money as a way to get the things they don’t have are willing to take risks to get it.  Those who view it as a representation of what they cherish the most (freedom) are less willing to take foolish risks to get more of something they feel they already own.

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