When it comes to personal finance, we tend to idealise money. We think of certain financial habits as, simply, good or bad. Simplifying money this way can really limit the way we handle our finances.
Australian currency picture from Shutterstock
Financial writer Carl Richards explains that money is generally thought of in terms of spending and saving. Spending is good; saving is bad. But this is a really basic view that can make personal finance intimidating. It makes us feel guilty for spending, even when it's practical. It can make us overly obsessed with saving. Instead, he recommends thinking of money as something meant to work for you — a tool:
Tools are meant to be used. They're not meant to sit on a shelf and collect dust. Instead of thinking in terms of saving and spending money, I started to think of using it....Money is meant to be used, to be in motion. It circulates from us to other people then back to us again. Even when we save money, we're simply storing it for use later. When we use money today, we're not spending it or blowing it. We're using the best tool available to get the job done...This shift in thinking is definitely subtle, but it changes our feelings about saving and spending. We no longer need to think in terms of good and bad, positive or negative. We're focused on the outcome of our actions.
Richards suggests a much more logical way to think about money. Sure, it's still about your mindset, but rather than focusing on the ideal of financial behaviour, you're focused on your actual habits. And, yes, money does represent certain ideals — financial freedom and security for instance. But in this way, it's still a means to an end.
For more detail, check out Richards' full post.
Rethinking Money, Not as Good or Bad but as a Tool [The New York Times]