Friday, November 21, 2014

The 10 functions of money

What's money good for? From Richard Templar's book, "The Rules of Money", money is good for 10 things. I found the list quite exhaustively, though some points are really be lumped together as a single point. But here it is:

1. Security

I think money provides a huge security for me. I need to have a certain amount in my bank before I can feel safe that I can tide through the month. I also need to save up a certain amount for my future retirement, and also a bit at hand to tide through life's emergency. I guess this is my number 1 priority in wanting to get more. It could be more psychological, I understand.

2. Comfort

Money can't buy everything, but for the things that it can buy, it does it really well. Don't think of just big cars and huge condominiums to stay in, it can also be a comfortable and good medical facilities for your loved ones and a warm bed and food for your children. I realised I don't need too many comfort items, but money does what it's supposed to do - to satisfy those creature needs. Like a really nice bed to sleep in, and a warm and tasty food afterwards, haha

3. Luxuries

I find that this point is the same as point 2, just on a different scale. It can be grouped together as one single point. Fine wines, good meals at top-notch restaurants, a good relaxing holiday overseas, a branded bag etc...these are what money can buy that you may want, but not necessarily need. Still, life is not meant to be survived - it's meant to be lived. So indulge yourself in such things, especially if it creates an experience that you'll remember for a long time.

4. Mobility

The author put first-class trains seats and plane tickets, as well as trips on cruise ships and chauffer driven cars in this point. Hmm, somewhat like point 3 to me as well - good to have but not necessary. For all purpose, I'll treat this as a luxury items. But money does buy you mobility. I've a student whose parents are very very wealthy. She practically flies in and out of Singapore maybe every 2 weeks or so - sometimes as short as a weekend trip, sometimes as long as a month long holiday. It's disruptive to my lessons scheduling, but hey, I can't help but be a little envious when the furthest country I've ever been is Australia on a NS month long war exercise! With enough money, you can book a ship to Antartica (I heard it's about 16k for a month long journey) and even a space flight. Of course, once Richard Branson's company settled the underlying issues with his space shuttles first.

5. Status

Rich people will have different status, that's for sure. You'll get invited to special occasions and exclusive clubs. But these are none of my concerns. However, money does get you special status - I'm just not sure that status will still be there when your money is no longer around. I highly suspect that acquired status will be gone too. This is never my priority in wanting to get more money, but I think some people might see this as quite a motivation.

6. Influence

Money can buy you influence. Influence will get you power. It's a little more subtle than the previous point of money giving you certain status. A lot of powerful rich people get pull enough strings to make even government bend to their request. America history of wall street is full of such people. A few big names comes to mind - Rothschild, Rockefeller, Astor, Vanderbilt and so on.

7. Freedom

This is what most people want to acquire enough money for. Once you have the capital, you get generate enough passive income so that it will exceed or match your expenses, so you won't have to work for money again. Financial freedom - that journey that begins all journey.

8. Leisure

I think this point is tied to the previous point on freedom. With freedom, you will have leisure time, so in effect, your money buys you time instead of paying time to get money in your earlier part of your life. My take is, don't wait till you are financially free before you start enjoying your leisure time. Hedge your life by taking small leisure with your loved ones every now and then, just like you are hedging your future life by saving up in the present.

9. Popularity

Money can buy popularity, but I doubt the kind of acquaintances and friends are the kind that you really wish to associate yourself with. Still, money does its job of making you more popular - you just have to exercise your own judgement to see who will still be around when you have no more money.

10. Philanthropy

Money enables you to give more. It's strange, isn't it? Spending time and effort to get more money, so that you can give to more people. I think money makes you more of who you are. If you're a jerk without money, you're a bigger jerk with money. Likewise, if you're a generous person without money, you'll be even more generous with more money.

Is there any more uses or functions that money can serve as?


Singapore Man of Leisure said...


Keeping score.

Quite evident in our financial blogging community ;)

Benchmarking, comparing, putting side by side, etc.

We either come away happier - my one bigger :)

Or we go away dismayed knowing some other "idiot" achieved the milestone we hit 10 years earlier than us!? What the... Our xalls shrink :(

Silly right? Compare money not enough, must compare by when too?

Once upon a time it's 40, then it became 35, now I read some want to do it by 30!?

I feel for the next generation. It will be - "I want to be financially free at 25!"

Talk about self-imposed stress?


Investopenly said...

I will add another one here : to show of (for some).


la papillion said...


Keeping score is like having popularity/status (point 5 and 9) :)

It's scary isn't it? I thought that financial freedom is a journey for yourself, didn't know it is now a competitive sport! It goes to show that there's a lot of things involved in being 'money free', most important of which is the mindset.

If you're going to race each other to see who did it first, might as well re-join the rat race. Just different league only lol!

la papillion said...

Hi Richard,

Ah, showing off is like status/popularity too :)

My wife had a crazy idea for a T-shirt. It's made of a transparent plastic slot in front of your t-shirt, of which you can put in your 10,000 dollar note for everyone to see. It's high crass and sure to attract the attention you need!

financialray said...

When money is abundant, men buy extravagance. Some men buy horses. Some men keep mistresses. Some men buy so called luxury items like fast cars.

la papillion said...

Hi financialray,

I agree. Lifestyle inflation I suppose. That's why they say men's true colours are revealed when men are rich.