Is money everything?
Yes and No.
Money is one of the most effective tools that can enable us to reach our goals.
However, we can not simply buy our way to happiness. In reality, our different life goals require different combinations of money and effort in order to achieve them.
When looking at the psychology of why this is, it’s easy to see why.
Money & Maslow’s Hierarchy of Needs
One of the most popular psychological theories on motivation is Maslow’s Hierarchy of Needs.
In a nutshell, this theory claims that individuals must first meet their lower-level needs before they begin working towards their higher level needs.
Maslow’s Hierarchy of Needs is often depicted via the following pyramid:
The pyramid’s lower levels represent our less complex and basic needs while the pyramid’s higher levels represent our more complex and advanced needs.
While our basic needs can easily be satisfied with enough money, we can not buy our way to the top of the pyramid. I.e. we can buy food, but can’t buy living up to our full potential.
As a result, money becomes a much smaller factor in determining our happiness as we move up the pyramid. In fact, there is an exponentially inverse relationship between money and effort required as we reach our higher level needs:
Here’s another way to visualize that inverse relationship:
When Money is Everything
Basic Needs
Money is everything when it comes to our basic needs such as:
- Food
- Shelter
- Clothing
- Personal Care Products
- Healthcare & Insurance
That is because the vast majority of our basic needs can be satisfied as long as we have enough money.
By the same token, these types of needs don’t require us to exert much personal/emotional effort.
When Money is Not Everything
Psychological Needs
As we move up the pyramid, we can begin to see money’s diminishing returns.
When it comes to our psychological needs, money is useful because it enables us to do things such as:
- Going out to dinner with friends
- Purchasing a gym membership to stay in shape
- Buying art supplies to improve our art skills
The key word is enable.
At the end of the day, just throwing money at our psychological needs won’t be enough. That is because meeting our psychological needs requires us to exert a great deal of personal/emotional effort.
As an example, while we can spend money on the above items, we still need to:
- Maintain relationships so we can go out to dinner with friends
- Commit to becoming healthier and staying in shape
- Trust the process and showing up everyday to improve our art skills
Self-Fulfillment Needs
At the top of the pyramid, money becomes almost meaningless.
That is because meeting our self-fulfilling needs requires us to put in almost all of the effort.
As much as we want to believe that we can, we simply can not buy meaning in our lives. That is something that can only come from us making the exerted efforts required in order to find meaning in our lives.
In the case of financial independence, FIRE can enable us to find self-fulfillment (i.e. more time, etc.).
However, achieving FIRE is not going to magically give us meaning in our lives. That is 100% in our hands.
Is Money Everything: Final Thoughts
Money should only be viewed as a tool and never the goal.
That is because while money has the ability to open up the doors for us to grow as individuals, it is up to us to walk through these doors.
If making money is our end game, we will never hit the highest levels of Maslow’s pyramid.
Thank you for reading! 🙂
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