JumboCash: How to think about money

For the finale of JumboCash, I want to return to the root of what money is all about. Throughout the semester, I have discussed financial jargon, investing strategies and statistics related to money. However, I skipped over the most important component of investing: how to think about money. Inevitably, we tend to compare how much money we have to how much others have, and we often try to live such that we maximize how much money we have. At the end of the day, having the most money should not be your ultimate goal. Happiness is the ultimate goal, and money is a tool to get you there.

If your goal is to have more money, you will be stuck chasing that goal forever because you will never have enough money. There’s no firm, tangible, achievable goal in place. 

But what about things that make you happy? What are your most important goals? Money is a tool to help you achieve these things; it is not an end in it of itself. Money buys the bus ticket home so you can see your family. Money buys your coffee from the Rez because it’s your morning ritual. Money buys your new camera because photography is your biggest passion.

We tend to think, “Well, if I had $1 million more, it would be a lot easier to achieve my goals! And I would be so much happier!” Well, research at Stanford University shows that we experience more pleasure from the anticipation of gaining money than when we actually obtain money in the present. Our brains are wired to constantly think about the future, which can lead us astray with money. Because the anticipation of gaining money in the future feels so good, we’re programmed to be greedy, even though it won’t make us as happy as we expected.

Comparing yourself to others tends to leave us unhappy, and this holds particularly true with money. In fact, a recent survey revealed that only 13% of American millionaires consider themselves wealthy. Why don’t these high-earners feel rich? It’s likely by comparing themselves to others, probably those making more than a million dollars. If having a lot of money is your goal, you will only feel happy if your income is larger than that of whoever you compare yourself to.

Ultimately, smart money management means having enough money to achieve your goals — not the most money.

To anyone who has read my column this year, those who have personally reached out to me, those who have shared the column and those who have engaged with my writing: I thank you all so much — you have impacted me more than words can express. As Irish poet William Butler Yeats said, “Education is not the filling of a pail but the lighting of a fire.” My only hope is that I have sparked a fire in some of you — a spark to learn financial terminology, to research investing strategies and to empower yourself through investing knowledge.