This is the sixth part of The Simple Dollar Book Club reading of Your Money or Your Life. Want to know more?
The second chapter of Your Money or Your Life starts off with a focus on the four perspectives of money, an attempt to answer a very rhetorical question: What is money? It’s not an easy question because it depends heavily on your perspective. Here are the four offered in the book:
1. The Street-Level Perspective of Money – The Practical, Physical Realm
This is the level of budgeting, of the mechanics of spending and saving money. Most of the topics I talk about on The Simple Dollar focus on the physical realm of money, and it’s what most people think of when they think of personal finance. In fact, often when I talk about the other levels (often the more interesting ones), I get accused of not writing about personal finance.
2. The Neighborhood Perspective of Money – The Psychological Realm
This level is the interesting realm of money myths – the other attributes that we assign to money. Is money evil? Is money a sign of social status? Is money security? Is money a representation of power?
Most of these questions really depend on the experiences you’ve had in your life. For example, my life experience has told me that money isn’t evil at all – any moral stance that money has is merely an extension of the moral behavior of the person that holds it. Yet I know many people who deeply mistrust people with money simply because they believe money to be evil.
When you think of money, what does it bring to your mind? For me, I strongly relate money to security – having more money means that my family’s way of life is much less likely to be affected by disaster.
3. The Citywide Perspective of Money – The Cultural Realm
There are also culture-wide phenomena when it comes to money – for example, consumerism. In the United States (and much of the western world), there is an ingrained part of the culture that says that it’s appropriate to spend money with abandon.
This leads to a lot of other pressures and cultural influences: the desire to “keep up with the Joneses,” for example, is culturally pervasive, as is the idea that we need to spend money in order to support the greater economy.
4. The Jet Plane Perspective of Money – Personal Responsibility and Transformation
This level is the one that really made me think. Here, Dominguez and Robin argue that money is something we choose to trade our life energy for. We work to earn money, right? So we’re trading the energy and time that we spend on work for money. Every hour we work hard for our hourly wage, we give up an hour of our life and an hour’s worth of energy for that money.
I feel this is a truly profound way of looking at your money and your time. Every time you work for money, you’re exchanging a piece of your life for a certain amount of cash. What will you do with that cash, that piece of your life? Will you spend it on more clutter? Will you invest it and use the income to give yourself freedom?
Are you willing to trade more and more of your life energy for more and more material goods? I found that this perspective, more than any other, really makes me question how I spend my free time and the things that I choose to spend my money on, and it’s been the key issue in my mind in my transformation from spending more than I make (mostly on unnecessary stuff) to spending far less than I make.
Tomorrow, we’ll continue in chapter two with the section ” focusing on the first half of the chapter up to the start of “Step 2: Being In The Present And Tackling Your Life Energy” That section is on pages 59 through 75 in my paperback version of the book.