MONEY ISN'T JUST MATH

Today, we not only have cash, but we have a massive industry built upon credit. 

We can borrow funds to buy just about anything we want. 

There are an endless number of ways to get money immediately instead of waiting for that next paycheck. 

These options have created complexity in our emotions with money. Credit has completely skewed our perception of how much money we really have.

With credit we can live the same amazing lifestyle of those around us, even if we don’t have as much income or wealth. We can buy the same products, drive the same cars, and own similar houses. 

This is what credit has allowed us to do. 

We can use it to create a fabulous lifestyle, even though we can barely afford the monthly payments.

We have built expectations in our heads of the lifestyle we deserve. Our friends all have a house in a certain area, so we should too. Our friends have the newest phone, so we should too. 

Our egos are strong forces. We want to keep up a certain image or reputation, plus we work really hard, so why shouldn’t we have everything we want? The world has been created for the consumer, right? Companies offer creative financing therefore we can afford that new item today.

With the inception of credit, a dollar in your pocket does not mean you only have a dollar to spend. If you have a credit card, you may have $1K to spend. 

And, once you’ve charged that $1K on the credit card, all of a sudden, you owe interest on that balance.

You see your friends driving a new car, and you decide you want a new car. They either paid cash or borrowed on a three-year loan term. However, you can’t afford the monthly payments on a three-year loan, so you decide to go for the 84-month or 96-month term. That’s 7-8 years you will be paying on this car. 

Think about that. Do you really want a vehicle that you will be paying for over the next eight years? That would be like making payments on your 2014 vehicle right now in 2023. 

Just because we have access to credit doesn’t mean we need to use it. Living a lifestyle or keeping up an image you can’t afford isn’t something you can manage long term, and it doesn’t really make you happy.

This is why money isn’t just math. We are emotional beings. We have proud egos, expectations of what we think we deserve, and our image to uphold. All of these intangibles cost money to keep up – money we don’t have. Humble your ego, give up your expectations, and be happy with what you have. When you accept these, money will become math again. 

HAPPINESS

Does it really make us happy to buy new things even when we don’t have the cash to pay for them?

In the moment, yes, we get a release of dopamine, a hormone that produces a feeling of pleasure, but that dopamine high is only temporary. 

It fades fast. Our brains get used to the familiar very quickly, which means that new car you purchased last month is already familiar. It’s not new. It doesn’t give you the same excitement it did when you first bought it. Dopamine feelings from new purchases are temporary. This isn’t real happiness.

I remember during a summer in between college years, I was living with my parents and working in a factory as labor. This particular summer, I was working third shift, from 11pm to 7am every night. I got into a routine, where my mom and I would go to the local gym every morning after work. I would then go home and sleep most of the day away, getting up a couple hours before going to work the next night. 

Working nights was not for me. I wasn’t seeing my friends, and when I did, I was tired. I wasn’t happy this summer like I had been in past summers. 

My mom and I went shopping at one point, and I told her I just needed to buy something to feel happy. I wish I had known then what I know now. 

True happiness doesn’t come from buying things. It might have felt good in the moment, but the wallet I purchased didn’t really make me happy. 

If I had taken some time to really understand the cause of my unhappiness, I would have been able to overcome it much easier. 

The real cause was the uncertainty in my life. I didn’t know what I wanted to do, and I was taking on student loans that I didn’t know how I would pay back. The growing debt and uncertainty were the real reasons behind my unhappiness, and the hours I was working didn’t help either.

True happiness comes from the inside, not from external purchases. 

Don’t let your fascination with external influences and the latest trends be your source of happiness. You will be very disappointed if you rely on external influences to be your source of happiness. 

Instead of wasting your money on stuff that doesn’t matter, start appreciating all the little things you already have.