The real use of money is to buy freedom

As the founder of a profitable software company, I happen to make more money than most office-goers of my age. There’s no shame or pride in admitting that. I don’t dislike money. Having quite a bit of it is simply a fact. Though there must be many thousands of people who have enormously more money than me, I consider myself lucky to have more than I need right now.

However, more than the money, what fascinates me is the nature of money, its ubiquity and how our behavior gets unknowingly influenced by it.

The insecurities attached with the money

I have grown up in a typical middle-class household where one is rightly nurtured into not being extravagant. I was taught to value money (which I thoroughly appreciate). Even though, in my childhood, I always got whatever I wanted, the truth is that I never wanted big, expensive toys. That attitude has lingered on to the present day. Now I know what matters and what doesn’t. I firmly believe that material possessions may end up owning my life rather than I owning them. I would certainly be not happier if the entire day I worry about my new scratch-less Porsche, my next investment or whether my portfolio is currently showing positive or negative returns.

A life spent mostly hoarding money and possessions is a wasted life

Keeping the things you own in a good condition and actively managing and cleaning them is one aspect. The other aspect is the constant worry of losing it all.

Isn’t it funny that one first works hard to earn some money, and then worries constantly about not having it anymore? This insecurity keeps even the richest people actively working to make even more money, while they sweat away their only life, working extremely hard while deprioritizing their friends / families (which of course they will regret at their deathbeds). All this hard work is for the future, though. When will this future arrive, they don’t know. With enough money in the bank, they will feel safe. Except that rarely anyone defines “enough” and no body ever is really safe. A bus could run over you tomorrow, and no amount money could save you if you were destined to die.

It’s true that having money is a good thing, and that if you happen to afford good (and probably expensive) medical treatment, chances of you surviving a crash might be higher. However, I can bet that this life-saving amount would be much lesser than what most people aspire for to “save”. And there’s always medical and disability insurance to take care of this scenario.

Then why do we run after money?

I feel there is an irrational attraction which humans have for security. They are inherent afraid of their mortality and subconsciously or otherwise, will do anything that assures them of a meaningful, comfortable existence. Money is perhaps the best proxy for this permanence that we desire. It might also be related to our evolutionary instinct of hoarding food for the rainy days. Better to have more food than less food, right?

Luxury lifestyle and the hedonic adaptation

People who make a lot of money too soon such as entrepreneurs or lottery winners usually end up increasing their standard of living. Consider how going to expensive restaurants, watching movies on a bigger TVs, or moving into a larger home would make you happy only for a while. After that initial rush, it’s back to normal. This is called hedonic adaptation and I’m sure as we reflect, we can see that this adaptation has happened many times with us, yet we keep falling into its trap.

Some might argue that even the initial rush is worth all the money, but there are many unintended side affects of significantly changing your standard of living. You end up not hanging out with your friends that often because they won’t go into that expensive restaurant. You end up spending a lot of time managing whatever things you’ve bought. You end up feeling bad about yourself because now your comparison is with houses much bigger than yours. But worst of all is that you end up feeling out-of-place at all the places that your earlier avatar once considered luxury, say an economy class airline ticket to Europe because now you prefer traveling business class.

Isn’t it ironic that just because you’re used to a better standard of life, you’ve suddenly excluded so many potential joy-bearing experiences? Sadly, some people never experience this non-correlation between money and happiness, and they end up dedicating their lives to making money while they could have had been much more happy chasing experiences. Money in the bank has rarely given anyone any happiness. All it has given is a false sense of security.

Is money such a bad deal?

I’m not saying that money is inherently bad and that we should keep away from it. Even though the swiss are considering giving money to all its citizens who are alive, some amount of money is absolutely required to stay alive. I’m also not parodying all the poor people in the world who simply struggle to make their ends meet. My point is a subtle one:

After a certain, basic amount that is required for a reasonable daily life, unless put to its rightful use, the extra money could end up consuming one’s life and make one actually less happy than before.

Freedom: the only luxury that extra money affords

Freedom is very important to everyone. The freedom to do whatever one wants, wherever one wants (within moral limits, I hope). The only, legitimate use of money is to be able to say no to things you don’t want to do and yes to things which feel out of reach.

For instance, without money, it is not possible to go on an adventure trip to Antarctica. But that trip may not happen if you’re busy making even more money or busy managing your existing stash. And, although it might be true that certain people just get kicks out of making money, science definitely tells us that certain things make us predictably more happy than others. So people who are irrationally attracted to hoard are just victims of uninformed biases.

Yes, I know that life has no real meaning and that worrying about time running out is futile, but happiness is real and being happy is more important than not being happy. If we make a mathematical model containing life expectancy and value of life, each passing moment of our life would seem to be infinitely more valuable. Then, why not prioritize life over money and recognize that the true value of money is in actually letting us design a happier life which consists of varied experiences, many of which (sadly) cannot be had without money. (One of such experiences is helping needy people. Science tells us that it is an easy way to “buy” happiness.)

In nutshell:

We must constantly question what money really is for because, by default, it has some magical properties of animating most of our non-retrievable waking hours. Let money not guide you.

(PS: A note on managing money. It’s odd when I see people sweating over which investments to make. Typical methods of calculating “returns on investment” tend to forget the cost of our anxiety in deciding and the cost of time spent analyzing, managing and maintaining that investment. Is that extra percent of returns really worth it if you couldn’t sleep even for a single day worrying about whether it was the right decision?)


  1. True. The lure of money is not the desire to spend it; it is the desire to have the ability to spend it. Money buys Freedom, and confidence 🙂

  2. True. The lure of money is not the desire to spend it; it is the desire to have the ability to spend it. Money buys Freedom, and confidence 🙂

    Our newfound confidence allows us to go deeper into the cave of our thoughts, which isn’t always a good thing.

  3. Those of us who struggle each monthly wage packet to make ends meet, whose cupboards are sometimes bare, and at Christmas feel guilty that they have not bought the kind of presents they wish they could have for their family – we do dream of a life without such worries.

    But I think you’re right, it’s not really the luxuries we dream of, it’s the freedom from worry about money and thus being able to focus on being happy. I look back and realise that most of my life and that of my parents has been about trying to make ends meet, rather than enjoying what’s going on around us.

    I often dream of having the money to build a big woodworking workshop and fill it with all the finest tools. But I realise now, it’s not the luxury tools I’m craving – it’s the freedom not to be stuck in a normal job because I’m worried about making ends meet, and instead have the freedom to get up every morning and do something I enjoy.

    I have rambled. But in short, I appreciate your post – well said.

  4. Hi,

    All excellent points. You reminded me of this book, The Wisdom of Insecurity by Alan Watts:

    Money buying freedom is a very useful insight. I just quit a job, having realized I was working for a full blown sociopath (the entire checklist was ticked off) and so have been reverse engineering what was going on in my head. I realized I’ve always viewed money as a side effect of what I do (software) so making enough money to keep me solvent and out of a 9 to 5 wage slave job was the thing motivating me, not the cut in salary by being a contractor. I derived satisfaction from being creative. But this SOB turned that into a weakness, lying about “cash flow problems” and other stuff… even though it was completely unnecessary.

    so why do sociopaths do what they do? What fundamentally motivates them? Manipulation of people and that is much easier when you have the freedom (the power and the money behind it) to do so – and the more the better. You’re not a very good sociopath if you have to worry about survival level stuff like doing actual work to earn your own money, not leeching off your prey like the banksters at HSBC.

  5. “The freedom to do whatever one wants, wherever one wants”

    What about the freedom from wanting? Money can’t buy this… The need to always have great experiences is not real freedom, in my perspective, and indeed could be the base for more misery in life. Happiness and “doing” aren’t directly correlated.

    Thanks for the post, good food for thought.

  6. This has been something I have known for a long time, but at the same time I also understand that the reason I want to make money is so that I can take care of my family and to provide for myself. I call it the financial freedom.

    I see nothing wrong with traveling in business class, as a person I feel I could put that silent time to creative use 🙂 And what better place to do it, than 30,000 feet up high 🙂

    Money is as bad as you want it to be, if you never learn the simple lessons regarding money, you will always continue creating a circle that will repeat itself. Money in -> Money out -> Money in and so on. It never stops.

  7. Nice Article, Paras. Totally Agreed! With you…

    I like the headline…

    Keeping Sharing 🙂

  8. The author seems to have got it all wrong. Not sure how versed the author is in dharmic ( natively indic / eastern ) darsanas / lines of thought. The article betrays a very schoolboyishly naive view of money / wealth (artha) and “freedom”. Seems to have a very western materialistic view of “freedom”. The entire argumentation is beset with flawed assumptions and fully operates under western categories of the “nature of man”. There is a fundamental difference in “freedom to” and “freedom from” – the so called positive and negative liberties in western philosophy – . More analysis based on response to this comment.

  9. Having more money than you need is great but it comes with the responsibility to use it wisely. It’s easy to spend money paying off your highest interest debt when still have debt. It’s much harder to spend your money wisely to do the most good when you are already secure enough.

    You’re also burdened with the responsibility of being worthy of such great fortune. Suddenly everyone has great expectations of the wealthy guy, including yourself.

  10. Nice one! A few points 🙂

    Money is also an easy way to evaluate your progress in something.

    Also it’s possible to do virtually anything without money. E.g. adventure to Antarctica will just start earlier for a person not having a money to spend – I recall considering a job opportunity just as a matter of having such a trip 😉

  11. I wonder how this post might read if you were not owning your own business and living comfortably, and not from a middle class background. 🙂

    I have noticed that people talk about how money isn’t everything after they have some.

  12. The flaw in this line of reasoning is that money in our culture is created out of debt. All fiat money is loaned into existence. Therefore the more money (and thus freedom) I have, the more debt (and thus servitude) someone else in our economy has. Debt backed money is a zero-sum game, rigged towards those who already have it and those who make its rules (the banks and politicians). The only way to create true freedom for everyone is to move away from debt-backed money. One possible solution is reputation-based gift economy. (See and the like).

  13. Great article,
    Having gone from having financial freedom for a number of years before falling into my current slump of being paycheck to paycheck I can attest to this.

  14. Your phrase “hedonic adaptation” is perfect for describing the risk a large influx of money could bring. I’d be interested to hear more specifics about healthy ways to react to money while not losing touch

  15. A post that’s true to its core. I love this.

    I myself do not have a lot of money but whenever I have one, I will always invest in experience for my long term gain rather than spending all on materials for a short term reward like most. As Peter Thiel once said about saving:

    “It almost never plays out that way in practice. What seems to happen is that after some period of time, people are making good money and they’re typically spending all of it and it becomes really hard to dial that back. If you bought a house or have all sorts of obligations of one sort or another it may be very difficult.”

  16. Paras,

    I enjoyed your article. I too grew up in a middle class family, much the same as you. I was taught to work hard and to use good motives when working.

    I remember early on, deciding not to take part in activities because I just focused on the money, I was 16 years old. I consider it unfortunate that I repeated that decision many times until my late 30’s.

    Looking back I missed out on many of the experiences that later brought me much joy.

    So now what?

    I try to focus on the experiences, instead of just getting the money. I have experimented with less money, and the joy was still there. However I still need money, I still want and work to be comfortable.

    I work with many that just focus on the money and point out that “with so much money you can do good for others.” I think you can do good for others before you get ‘the big pot at the end of the rainbow.’

    Thanks for your article, and as Abhishek mentioned above…

    Keep sharing.

  17. Hi Paras: Well said. In fact, we should do the following test to check how much money is needed to lead a comfortable life:

    – Are we enjoying or just accumulating money
    – Are we dedicating quality time with family
    – Are we debt free…one should strive for it!

    If the answer to any of the above is no, then, the respective person should read this article 3-4 times to start enjoying!!

    My 2 cents


  18. Very intersting views to me because l have been thinking ‘how can l be free from money’?
    Which may not be realistic but then at what level does money lose the ‘freedom buyer’ tag and become the ultimate tool to satisfy human greed?

    Just for thoughts!

  19. Great article and it is so true that there is freedom that we crave that can’t be bought with large sums of money but rather acknowledged.

  20. I doubt this is really your inner thought or created thought because of your outstanding Financial situation.

    You know what, you would never have thought this way had you been just office goers, saying earning 50K a month in india. we tend to become philosopher once we have something, until, we don’t have it, we behave like ordinary human being.

  21. i’ve once heard it said,,..
    Money is like manure, pile it up and it stinks. Spread it round and it grows things.

  22. One can’t overlook importance of money as the main driving force behind human progress. Look at the mankind’s progression from ancient times to present day China or India or for that matter anywhere across the World.

    Only money, greed and self interest have been instrumental in creating a complex web of trade, markets and of course continuous improvement in product and services without which mankind would have been still struck up with the misery of subsistence agriculture. One will definitely shudder to imagine a World in this scenario, where an ever increasing mouths to feed, would have simply made the civilization on Mother earth extinct. It would be a matter of interest to explore relationship of money and greed with evolution.

    First real use of money is to survive. Financial freedom is at the top of pyramid. One enjoys that freedom only when one survives.

    “Greed is good”.

  23. I never understood one thing in life…..why do people say these things or discuss this moral gyan once they themselves have already achieved it……..I would have more appreciation of this article if paras chpra had wriiten tis article 4 yrs back and sam eset of peple appreciate him.
    Second ironic fact is, if somebody who could not achieve this much success and say this fact, then other poeple (including those who have been writing replies above) say “Saala khud kar nahi paya”…..isliye yeh keh raha hai…….

    Real fact is the definition of success at the first place which is different for everyone….one who can understand that would never talk of “that MONEY is not an important parameter”.

  24. Money is a little like meth. Amazing when you first encounter it but you always need to up the dosage to sustain the high.

    IMO the value of money depends on the things that make one happy.

    There are days when I literally stare at my computer screen for 15 minutes, not because I’ve had a brain freeze, but because I’m shocked at the fact that I own a piece of hardware that can instantaneously take me to any place I want. I can watch a video that explains gravitational waves, I can connect with any CEO and pitch my passion for A/B testing, I can insert myself into interesting conversations (like this one), and I can sit in my home in Michigan and collaborate with clients all over the US (without even meeting them in person). The things described above are the things that make me happy (PS: I also enjoy spending many many leisurely hours with my wife, but that doesn’t require money either). Now, if my circumstances were different, or if I didn’t place value in such matters I too would think more about money. Being poor isn’t fun, but being wealthy can be pretty meaningless too. Happiness lies in the Goldilocks zone, that’s where I plan on staying.

  25. I think – We do give too much importance to Money itself by refusing to understand that Money itself is a by-product of a job well done. If a software does its job well and solves a pain, it wins more customers and hence more money. If a film-maker makes movies that arouse emotions , people want to watch it. If a surgeon operates well regularly enough, he commands his price.

    What happens when you decide a price point & then try to sell something that probably isn’t worth all that money in the first place ? One would’t get money. But since the premise was about earning money in the first place, one keeps chasing.

    The chase itself is also in the mind, it seems then.

    Here’s a good 3 minute talk by Alan Watts –

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