The Value of Money

Money can serve many purposes.

It can be used to buy things for consumption.

It can be used to buy objects that convey status (Rolex, Ferrari, Cartier diamond necklace).

It can be used as a way to keep score, such as on the Forbes 400 list of richest people in the world.

It can be used to buy other assets — a house, an academic degree, a mutual fund.

The purpose that money serves will be dependent on the values you adopt and the choices you make.

I’ll share one use of money that often gets overlooked:

Optionality

When you have sufficient financial reserves (note: I said reserves, not income), you get more options in life.

If you find yourself re-assigned to an abusive boss during a company re-organization, you have the option to walk away rather than remain in a hostile work environment.

If you get suddenly laid off due to factors completely out of your control, you have the option to find a new job that fits well, rather than being “forced” into taking a short-term gig that deviates from your long-term goal.

If you have a major medical problem where you’ve exceeded the coverage of your medical insurance, or you don’t want to sit on a waitlist for a life-saving procedure, you have the option to get the best care possible, as opposed to that which others have decided is appropriate for you.

If you find yourself in a physically harmful romantic relationship, you have the option to get yourself to safety without considering the economic costs of doing so.

Having financial reserves gives you options (regardless of income level).

At the same time, anytime you spend your resources on something else, it erodes your reserves and thus your options.

(Of course, I say this as I’m drinking a decaf vanilla soy latte. But, hey, at least I’m aware of the tradeoff decision I’m making.)