“What good is money if it can’t buy happiness?”
― Agatha Christie, The Man in the Brown Suit

We had economics as part of our curriculum when I was still in school. It was not my favorite subject. To be honest, I didn’t like any thing other than mathematics. I also liked reading about history, but couldn’t remember anything when it was time for exams.

There are exactly two concepts I remember from economics. The first one is the law of diminishing returns. It says that the amount of pleasure you get from something decreases as you have more of it. That was easy to understand. And the teenage me had never thought of it. It stuck in my mind just because it was so logical and I had not thought of it.

The second concept was that “money is what money does”. This wasn’t that clear to me. It sounded like some vague quote or piece of poetry that could be explained according to the person trying to explain it.

My economics teacher explained it to us by saying that money is just a concept. And it has the value it has only because everyone recognizes and values it. Otherwise, it is just piece of printed paper – you can’t even write on it!

In other words, money is just an illusion. I could have all the money in the world and yet be poor if the people who hold the things I want, don’t recognize it. I could have absolutely nothing and be rich if I want nothing. Interesting, right? This was such a powerful idea that I couldn’t forget it if I wanted to.

My memory is not that great, and I could be wrong. May be they actually mean something totally different when they say that money is what money does. That doesn’t change the truth about what I just said about being poor and rich.

Growing up, my family wasn’t wealthy. No one who knew our family would actually realize that we had no money. My parents played the keeping-up-with-the-Joneses better than anyone else I know. It was more of a game of we-are-better-than-the-Joneses. They were never in debt, though. We barely managed to scrape by. The atmosphere was different, I grew up in India. I was surrounded by people who saved their money. We lived better than them and had nothing saved up for a rainy day.

I spent half my life with my parents who spent money on everything indiscriminately. I spent the other half of it with BusyDad who gets no pleasure from spending money. However he is peculiar in that if he wants something, he spends money on it without thinking. What is always been special about me is that I never cared about what anyone thought about me, and not just in terms of money. That meant that I didn’t have to play the keeping-up-with-the-Joneses game or better-than-the-Joneses game. I was frugal by nature. BusyDad taught me that if you really want something, you should get it.

Fortunately for us, we both are well paid. We both had the good fortune to be really good at something that pays really well.

Money now has a different meaning to me. If I really want something, even if it is something that everyone else in the world would consider a waste of money, if I cannot get it, having a huge net worth is of no use. Money is what money does. If it doesn’t do what it is supposed to do, it is not money, just personalized numbers I see when I log into my bank account, or pieces of printed paper and circular metal disks in my wallet.

I have been seeing a lot of articles on the net that ask you to cut that latte, or bring your lunch from home to get rich. Before you start doing it, stop and think. Do you get a lot of pleasure from it? If you do, don’t drop it. Retiring early may not be worth it. But if you are doing it just because it is a habit, and you are getting close to no returns (in the form of pleasure), may be that is your key to retiring early.

It is all about perspective. Do what you want to do. Don’t let families living on (or trying to, like us) less than $40000 a year guilt you into early retirement. As long as you know what you are doing, and it is important to you, go get the most expensive car or house. It is worth it. Just make sure that you are buying it because you want it, not because you think that is what you are supposed to want.

Post your comments below, let me know what you think!


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Monday, Mar 27, 2023