The mentality that can make your financial life unnecessarily difficult

The other day I shared a segment from my radio show about paying off debt in order to free up cash for a new housing purchase. I got pretty in-depth on the topic, but there is another aspect of that situation that I wanted to elaborate on. This additional concept is: “what does it mean to ‘have money?” If you answer this question wrong, and then act on it, you can make your financial life unnecessarily difficult. The weird thing is that your definition of “have money” will evolve over time, as your own financial situation evolves.

For many people, “having money” means having a great deal of discretionary income. It’s not a terrible definition. But it’s not great either. In fact, I personally lived with this definition for quite some time. A few years back when I had money rolling-in, no kids, and had more hair, my wife and I spent a lot of time spending money. Experiences, food, entertainment, and lots of stuff were our booty. But then something happened. We got sick of upgrading everything, sick of buying stuff, and decided that we needed to re-examine our relationship with money and financial stability. We had to redefine our “we have money” feeling. We started asking ourselves questions like “will we always have this discretionary income?” A couple of thousand dollars of positive cash flow per month certainly is great, but if we used it to just have a helluva time, then we were wasting an opportunity to “always have money.” Incomes come and go. Great jobs come and go. And positive net cash flow comes and goes. True stability doesn’t.

So when I used to say “we have money”, I really meant we had money to spend. Now when I say “we have money”, I mean we have money saved. There is certainly pleasure in having money to spend, but I’ve learned to seek the satisfaction that comes with saving money. It’s really easy to get caught-up in your ability to consistently create positive net cash flow. You can trick yourself into thinking that the tree will continue to bear fruit, but it won’t. Money hoarding for money hoarding’s sake, is stupid. But saving money because it’s a practical thing to do, isn’t stupid.

So, do you have money? Or do you have money?

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