Our relationship with money often feels upside down. We pursue it believing it will unlock freedoms and opportunities we didn’t have before. While there’s some truth to this perception, more often than not, it’s simple an illusion we hold.
Believe it or not, those who have reached an income of around $75–90k over time can attest that happiness tends to plateau around this number. Beyond this threshold, acquiring more assets and purchasing larger or better items — often deemed as inferior goods — doesn’t significantly enhance our mental and physical well-being unless accompanied by deliberate personal growth efforts.
In life, as in nearly everything else, what you invest is what you get. Simply increasing income or salary won’t magically simplify life unless you’re prepared to invest effort and intentionality. Buying convenience differs significantly from achieving lasting happiness and contentment, which are enduring states.
Since delving into personal finance in 2020, I’ve been captivated by the psychological aspect of our relationship with money. It’s one of the most personal and emotionally charged topics because money influences nearly every aspect of our lives — from our daily routines and relationships to our educational pursuits and community involvement. A common misconception persists in equating salary with happiness, assuming that more money equates to more indulgence and, therefore, more happiness.
However, the pitfall lies in succumbing to impulse purchases and accumulating possessions that don’t align with our core values. It’s easy to acquire more with more but that tends to lead to a downgrade in many areas of life, most evidently our mental sanity. More wealth translates to more choices and opportunities, but it also heightens the risk of losing sight of what truly matters.
When you hear the phrase “bleeding money,” it typically conjures images of reckless spending. However, anytime you spend on something that doesn’t align with your values, you’re bleeding money — whether it’s a negligible amount or a significant portion of your net worth.
Making Valued Choices
Making informed money decisions requires a deep understanding of your values and priorities, coupled with the financial resources to align them. The first big purchase people make when they earn enough tends to revolve around these three things: real estate, a car or education. Two out of the three are investments but far too many newly minted high earners are trapped into ultra luxuries and depreciating assets to impress others.
For myself, as my income and spending power have compounded over the years thanks to the market and taking calculated risks, I’ve become more aware about where to allocate my resources, focusing on what holds true value and purpose. I’ve let many purchases including everything from most clothing to eating out go as my values have leaned on buying more quality goods and services instead of quick alternatives.
The ultimate goal to maximize our return and minimize regret is to spend consciously on what truly matters to us, rather than constraining our lifestyles by trying to save every penny and purchase frivolous goods. When we understand our genuine needs and desires, we can make intentional choices that enhance our satisfaction and well-being.
Finding Balance
I urge everyone to conduct a personal inventory — assess what you truly need versus what you possess — and evaluate whether your spending aligns with your values. I tend to do this on a quarterly basis to understand if what I’m consuming is truly enhancing my life or acting as a buffer of some sort. You may discover that cutting back on certain expenditures not only preserves your financial health but also enhances your overall satisfaction and peace of mind.
Our relationship with money is complex and deeply personal. You won’t identify what you really need and maximize every square foot of your purchases if you don’t practice gratitude and try to question the true reason behind them. It’s a sad reality most people buy what they don’t need to impress people they don’t know. Breaking that habit early on will set you up for success and save your time, energy, and resources as well.
By understanding the psychology behind our spending habits and aligning our financial decisions with our values, we can achieve a sense of fulfillment and well-being that transcends monetary wealth alone. It’s not about denying ourselves, but rather about making choices that truly enrich our lives and contribute positively for the journey ahead.