Most people are familiar with the saying, “Money is the root of all evil.” It is a topic that many of us avoid since it’s uncomfortable to talk about.
However, we need money to pay the bills and buy essential items. It can also enable us to help others and secure our financial future.
Here is a closer look at why money is important and some of the potential challenges having money may create.
Why Do You Need Money?
Historically, civilizations have measured wealth differently. For example, agricultural economies counted the number of livestock as money. In today’s world, money is paper dollar bills and the number in your bank account.
At its core, money is a currency that the general public accepts to buy groceries, pay taxes and afford other expenses like traveling.
While money is a double-edged sword with positive and negative aspects, asking yourself why you need money can help you decide if pursuing a particular purpose is worthwhile.
Living a purpose-driven life can provide a plan to help you succeed at various goals and help others. Assigning a meaning to the money you earn allows you to use your wealth for good to benefit your household and community.
Why Money Is Important
Money can be a tool that can help you accomplish various goals and afford daily expenses. Here are some of the perks of earning and saving money.
1. It Provides Freedom and Control
One of the best perks of having money is the ability to have freedom and control over your personal circumstances. You’re not forced to make choices that may not be in your best interest simply because you are living paycheck to paycheck.
For example, you can afford not to work a second job or side hustle to make ends meet. Instead, you can spend your free time with your family. It can also mean not going into debt in an emergency or delaying a purchase that can improve your life.
You can also have money to travel to visit aging relatives or move to a better neighborhood. Plus, having freedom and control over your finances can remove stress from your life.
2. Money Offers Options for Your Life
America has long been called the “Land of Opportunity” because it is easier to improve your lifestyle here compared to other countries where poverty and violence are more common.
In addition to having more career and lifestyle choices, money can provide more opportunities. For example, you can afford to pursue an advanced degree. This training can help you get a better job that could make you rich.
Even if you’re happy with your career trajectory, a money surplus can help you move to your dream city, which can be near the beach or closer to family. Another long-term option can be retiring early.
Having more money can also reduce your total expenses for certain items.
Some examples include:
- Making a 20% home loan down payment to avoid private mortgage insurance
- Buying a car that’s more reliable and requires less maintenance
- Not relying on high-interest payday loans when you need to borrow money
3. It Allows You to Pursue Your Passion
Cash reserves can be helpful if you’re switching careers since it lets you make money from a hobby that you love. A new income-producing idea can take time to develop into a profitable business, and you could be stuck in an unfulfilling job otherwise.
Money can also help you pursue leisurely interests in your free time that bring enjoyment while improving your skills. For example, you can mentor at-risk youths, take gardening classes or use your vacation time to study art in Europe.
The options are endless since there are many ways to enjoy the best this world has to offer.
4. Money Provides Security
Financial security can provide peace of mind since you’re not worrying about how to pay for the bare necessities. Plus, you don’t need to have a high income or become a millionaire to achieve this goal.
Being financially secure can simply mean having enough cash to pay your basic monthly bills with ease. If you spend less than you earn, you can also save money for future expenses that you once would have struggled to find cash for.
Everyone has unique financial needs, but a common starting point is an emergency fund to cover surprise expenses. Start by having several hundred dollars and eventually save up to three months of expenses.
5. It Gives Opportunities to Your Kids
Have you ever heard the expression, “You can’t take money with you?” While the bulk of your income may go towards bills and retirement savings, allocating a portion for your children while they are young can be one of the biggest financial blessings.
One option is contributing toward their college education so they don’t graduate with a mountain of student loan debt. This way, they have more cash to start a family, buy a home or pursue a particular career that they couldn’t afford to while in debt.
For example, you can start funding a 529 plan when your child is born. With this strategy, the initial contributions can earn interest and equity value to use free money to pay for college.
Another way to help your child through education is by paying for summer programs to explore potential careers and internships. Otherwise, they may find a part-time job that provides immediate income but isn’t part of their long-term career goals.
6. Having Money Helps You Make More Of It
Once you secure your finances by paying off debt and saving your take-home pay, you can build up cash reserves quickly. Then, you can put your money to work and earn passive income through different investment ideas.
For example, you can invest $1,000 or $10,000 in an asset that earns 5% interest. The larger investment earns more interest, which helps that investor have more free cash to use later on.
You may start small by only investing $100 or less each month. In time, your original balance can appreciate in value and earn compound interest, and you will continue adding more cash to your savings.
This process takes years, but responsibly managing your money over time helps you afford more investment opportunities. Every time you invest, it gives your cash another chance to build your liquid net worth.
In time, your cash flow can be high enough to live off dividends and not have to sell an asset when you need to make a large purchase.
7. Money Lets You Give Back
Helping others in need can bring satisfaction because you can improve your community and support your favorite causes.
Some of the ways to give back locally can include:
- Animal shelters
- Churches and faith-based charities
- Food pantry donations
- Helping people afford necessary medical treatment
- Housing assistance
- Teen and youth centers
When you have enough money, you won’t have to take a vow of poverty by giving away every dollar that you don’t need to spend for your core monthly expenses and upcoming savings goals.
If you’re unsure how much to give, a Biblical practice is to donate at least 10% of your income to charitable causes if possible.
8. Spending Money Appropriately Can Buy Happiness
Happiness comes in many forms, including loving your career (even if it’s not high-paying) or reading books to your children at bedtime.
Money won’t buy happiness when you don’t spend it in moderation. This is because it’s easy to want something that’s bigger and better than what you already have. Sometimes, that dream is unachievable or unrealistic.
When spent wisely, money can bring relaxation and joy as a reward for your hard work. For example, you can celebrate an anniversary or afford a vacation.
9. Money Can Help With Your Help Health
Your health can be more important than how wealthy you are. Being healthy means you’re able to get out and spend your money on things you enjoy or use it to help others.
There are several ways to use money to improve your health, including:
- Buying healthier food
- Purchasing a gym membership
- Paying for doctor visits with cash to avoid medical debt
Remember, having money can mean you’re not stressed about not being able to afford your expenses. This can help your overall health as well.
In addition to practicing healthy behaviors, one way to save for future medical expenses is with a health savings account (HSA). Your contributions are tax-deductible and can also be withdrawn tax-free.
10. It Makes Life Easier and Lets You Live Fully
Money in its current form of dollars and cents lets you quickly buy what you need or want. You can also sell items to raise cash quickly since you’re not bartering.
The ease of making transactions gives you the flexibility of getting paid by your employer and spending or saving as you desire. For example, you can immediately use it to go shopping or take a trip.
If you’re traveling overseas, you can exchange your dollars for the local currency to pay for food, lodging and experiences. Without money, it’s a lot harder to live a comfortable life.
What Problems Can Money Create?
Mismanaging money can create challenges that can affect your financial goals and other aspects of your life. Here are some of the problems you should be prepared for when it comes to money.
Money Can Cause Stress
Not having enough money can cause you to lose sleep or work more hours to pay the bills. Plus, mismanaging your income can cause stress as you try to correct financial mistakes. For example, you may need help paying off credit card debt.
Having too much money can also be stressful if you’re not using it for productive purposes. For example, there are documentaries about people who won the lottery but didn’t use the funds wisely and struggled financially shortly thereafter.
It Can Cause Conflict in Relationships
Relationships can become strained when spouses don’t share a common goal or one partner continually overspends to the point where there isn’t enough to pay the bills.
Additionally, money can cause friction in business partnerships or between relatives when at least one party believes the funds are distributed unfairly. Written contracts can help avoid disputes, but wisely choosing financial relationships is also necessary.
As a quick example, you may decide not to lend money to a particular friend if the loan or the possibility of default could tarnish the relationship.
Money Can Become Too Important
It’s also easy to focus too much on money, making it an obsession or an idol and negatively changing your behavior.
For example, a successful businessperson may forsake their ethics with their employees and customers to boost profitability. It’s not wrong to make a profit, but it’s controversial when it comes at the price of harming others.
Another example is someone who sacrifices relationships with their loved ones or endangers their physical health by working too much. Some of these consequences can be irreversible, no matter how much money you spend to correct them later.
How Much Money is Enough?
How much money you need to pay the bills and reach your goals depends on your lifestyle. At a minimum, you should make enough money each month to pay your household expenses so that you can avoid unnecessary debt and stress.
After that, consider saving some of your extra income for short-term and long-term goals. Additionally, helping others in need is also laudable since some people simply cannot make enough due to legitimate reasons like illness or family circumstances.
What’s More Important Than Money?
Money doesn’t solve every life problem. It is only one aspect of life.
Forming relationships with family and friends is vital to living a well-rounded life since money can’t buy genuine relationships. Optimizing your physical and mental health is also essential.
Many also yearn to practice a religious faith and help others in need to fulfill a higher purpose.
Consider what is important to you, whether it’s faith, giving back, relationships or something else. Then, make sure money isn’t getting in the way of what you value most.
There are more good purposes for money than bad. You can use it to pay bills, save for the future and help others.
Like anything in life, money should be used in moderation to promote good choices. As long as you are using it to enhance your life and the lives of those around you, you are likely on the right track.