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USES OF MONEY
Published: 10/19/06

The three uses of money listed in all Economics texts are:

  1.  A store of value
  2.  A unit of account
  3.  A medium of exchange

A practical application might be more useful for most of us: money is a conduit.

Currency never relieved any suffering, provided any sustenance, offered any shelter, or granted any safety. Actual dollar bills or even fifties cannot make you happy. It is what they can purchase they makes them valuable. So money is simply a means to whatever ends you desire.

Some financial planners perform an exercise with their clients where they ask clients to name what is important in their lives. The planners further push the clients to be more and more specific to prevent glib answers like world peace. Clients are pressed to state what specifically makes them worry free or allows them to sleep at night. The point is to clearly elucidate goals that are specific to that client.


This is may not be an Aristotelian concept, but it is a very important life lesson. Money is not the essence of your desires; what it can provide is. Understanding this aids in establishing one’s priorities in life. Also, it may help us realize when our priorities change or so called inflection points. True Religion jeans may hold more allure for a twenty year old then an eighty year old.

A clear understanding of what is important in your life can alleviate the worry and anguish many experience regarding money. So this knowledge can help put small financial setbacks or market losses in perspective and allow most of us to lead our lives with a little less anxiety.

Then maybe we can all accept that our portfolio will never be quite as large as we desire any more than out stomach will be as flat as we want. So what, we will still be loved by those closest to us whether we own 50,000 share of Berkshire Hathaway or we can fit into a pair of True Religion jeans.

Written by: Marty Gallagher

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