People interpret the phrase “money is everything” in many different ways.
To some, it suggests capital is more important than anything else, including human lives. This isn’t a very pleasant worldview. In fact, it’s understandably off-putting to anyone with morals or compassion.
My interpretation is a little different.
I believe money is foundational. To thrive in the modern world, you must understand it.
It’s not about pursuing money above all else, which is a very hollow endeavor. Rather, it’s about recognizing money affects every aspect of our personal lives and even broader society. You’ll be more informed and have greater control over your finances because of it.
On that note, let’s dive into six reasons money is everything. Then, I’ll explain how to acknowledge money’s foundational nature without becoming greedy.
6 reasons money is everything in life
1. Nothing essential is free
It’s impossible to obtain life’s essentials (food, water, and shelter) without money. Even if you eat every meal at a soup kitchen and live in a homeless shelter, money – whether from taxpayers or generous donors – makes those resources available to you.
Heck, even if you inherit everything needed for survival, money remains in the equation, having been addressed by a prior generation.
The same applies to public services. While healthcare in Canada is often touted as being “free,” individual taxpayers contribute nearly $5,000 annually on average according to the Fraser Institute.
Again, it’s irrelevant that some people (i.e. those with no income) receive healthcare without paying taxes. The money we collectively pool together as members of society makes it possible.
2. It sets our priorities
We all need money. How we address that need sets the tone for our priorities throughout life.
For example, most people depend on full-time employment for covering living expenses and saving towards long-term goals like retirement. Consequently, maintaining stable employment remains a priority for much of life.
Even in retirement, one’s relationship with money doesn’t go away. In fact, it often becomes intensified as people navigate anxiety about making their money last and perhaps even think about passing it onto the next generation.
My point? At every stage of life, we all have strong relationships with money. Whether positive or negative, they determine what we do every morning.
3. Even its absence is incredibly powerful
You know something is meaningful when even its absence creates a powerful void. That’s certainly true of money. Those who don’t possess enough of it often struggle to make ends meet, let alone find fulfillment in life.
When this affects large portions of a country’s population, dramatic things happen.
History has shown the widespread absence of money (and everything it represents, including freedom, stability, and control) usually precedes demagogues arriving on the scene with radical ideas and plenty of scapegoats.
Check out this post from The Week for a deeper dive into the relationship between economic hardship and demagoguery.
The critical takeaway? When the issue of money goes unaddressed, tremendous problems arise. Its absence is always felt deeply.
4. Understanding money is essential for interpreting human behavior in the modern world
Countless experiments have demonstrated just how much money affects human behavior.
In an international study, researchers tasked one group of children with sorting buttons and candy. Another sorted money. The second group subsequently displayed antisocial, egotistical behaviors, such as a decreased willingness to help researchers or share prizes.
These were children aged three to six, mind you.
As one researcher put it, money changed the study participants even though they were too young to understand its full weight and meaning.
It’s not just childish immaturity and greed, though; adults exhibit similar behavior.
In a UC Berkeley study, researchers pegged two undergraduate students against each other in a game of Monopoly. One was given a very clear advantage; researchers let them start with – and subsequently collect – more money than their opponent.
Despite the game’s trivial nature, this advantaged player behaved as if they were inherently special. In other words, the money – although completely fake and in no way indicative of their actual economic status – made them feel superior.
This dynamic provides valuable context for human interactions at every level, from diners communicating with waiters to bosses instructing their employees.
It also frames our understanding of – not to mention vigorous debates surrounding – wealth and who “deserves” what in society, which is a can of worms I’ll leave alone for now.
Suffice to say, you simply can’t understand how humans navigate the modern world and treat each other without addressing money.
5. It’s how we’ve exchanged value for thousands of years
People who argue money doesn’t matter often bolster the claim with statements like, “it only has value because we believe so.”
To this, I say, “that’s kind of the point.”
According to American University Professor of Anthropology Chapurukha Kusimba, money has existed as an agreed-upon means of exchanging value for nearly 5,000 years. It’s not limited to any single culture or system of government. Rather, it’s a fundamental ingredient for large modern societies.
Indeed, a world without money would be unrecognizable to most of us.
Some might welcome that radical change. Personally, I think there’s a reason currency has persisted for thousands of years. It’s incredibly efficient.
No matter what you think of it, though, there’s no denying money in some form or another has been the dominant means of transferring value for virtually all of recorded human history.
6. Advanced modern economies are structured in a way that benefits those with it
We’ve all heard that phrase, “the rich get richer.”
It’s more than just a catchy saying, though. It’s a fact thanks to the way advanced modern economies function.
Just look at how tax laws treat capital gains.
Most employees have taxes deducted at the source. Before money even hits their accounts, the government gets its share.
For example, consider someone earning a $100,000 salary in New York. According to SmartAsset, they’d face an effective tax rate of 31.57%, bringing their take-home pay down to $68,428.
Compare that to a New Yorker earning $100,000 in long-term capital gains. According to SmartAsset, their take-home pay would be $74,714 at an effective tax rate of 25.28%.
That’s a $6,286 difference even though these hypothetical New Yorkers earned the exact same amount of money.
The real kicker, though, is that capital gains taxes only apply when you actually sell the asset in question. Our second New Yorker could leave that $100,000 invested and earn additional gains on money that would otherwise go to the government.
It’d be like not having to pay taxes on employment income until you actually spent the money.
In my opinion, this is the ultimate testament to money being everything in our society.
Think about how hard the average person works. They spend tremendous amounts of time and energy producing value through labor. Yet those with substantial capital to invest can end up so much further ahead.
Virtually every advanced economy works like this. Canada doesn’t even make a distinction between short and long-term capital gains. No matter when an investor cashes out, they’ll keep more of their gains than someone who earned the exact same amount through employment.
This reflects our priorities as a society. Equity – money kept in assets – is king.
Acknowledging money is everything without turning into Mr. Krabs
I think it’s possible to strike a balance between acknowledging money’s importance and recognizing the limitations associated with that. Here’s how.
As discussed earlier, it’s very natural to view yourself as superior simply because you’ve acquired lots of money.
To complicate matters, you probably didn’t achieve that status through random luck as in that Monopoly experiment. It likely took hard work and many sacrifices, leaving you with plenty of room to justify your superiority.
Never underestimate the degree to which factors beyond your control (i.e. where you were born and how you were raised) influenced that success, though. Take credit when it’s due but remain humble.
Focus on creating value, not obtaining money
Do you know Mr. Krabs from SpongeBob? Money is what drives him, often at the expense of relationships with his employees and customers. As a result, he’s never satisfied and has no real friends despite being incredibly rich.
In my opinion, it’s much better to view money as a reward for productivity. Without productivity, you simply won’t obtain it efficiently and nobody will like you.
That’s just how money works. The value you create must exceed that which you take in or it’s unprofitable for whoever sits at the other end.
Realize “money is everything” isn’t synonymous with “obtaining money is everything”
Related to my previous point, it helps to remember money’s importance goes beyond merely obtaining it. Money is also significant in that we can use it to help others and fulfill our own dreams.
To me, both activities are infinitely more exciting than acquiring money. It just so happens they’re much easier when you have wealth, which is reason enough to pursue it.
That, in my opinion, is the key to acknowledging money’s influence without becoming toxic or greedy. Frame your pursuit of wealth around goals, especially those greater than yourself.
I hope you found this post to be nuanced and thought-provoking. Money’s influence over us all is tremendous. By recognizing that, we can navigate the world more effectively.
For further personal finance related insights, check out my other articles here!