Sunday, February 15, 2009

Uses of money

I saw a line in the newspaper -- just part of a series of random sayings, really -- which highly offended whatever piece of me thinks it's an accountant. It shouldn't be a highly controversial statement, I suppose:
"Money is useless if you don't spend it."
Though it certainly seems that the main purpose of money is for spending (you know, to replace the barter system), I think it is a dangerous statement in today's world of rampant debt, bad mortgages, and layoffs. Not that I really believe in amassing huge fortunes, but I would like to propose a list of other uses for money.
  • Safety blanket. Having money stored away helps you keep moving with your life if you are laid off, victim to some disaster, or otherwise confronted with unexpected changes.
  • Options. It's hard to make good financial decisions when you don't have a choice how to proceed, and having some money stored away gives you more options. Finance a purchase, or pay up-front and interest free?
  • Independence. This one really springs from the first two I mentioned. If you have money stored away and some need comes up, you can handle it yourself instead of taking out a loan and making yourself dependent on someone else.
  • Investment. I already said I'm not a big fan of amassing huge fortunes, but look: having kids is going to be expensive. So is buying a new car or house. Retirement is really expensive. You need money to invest money, and you have to invest just to stay ahead of inflation.
Something in me just abhors debt, and makes me wonder why people put themselves in certain situations. I suppose that's a topic for another post...

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