What’s money for, anyway?

There’s a neat essay in today’s New York Times entitled Skip the coffee? What’s money for, anyway?. In the article, John Schwartz says that that he buys a latte from Starbucks every morning, even though it’s against the advice of virtually every personal finance writer, because it makes him happy. Ultimately, he asks, what’s money for if not to buy happiness?

The trick, of course, is finding the balance. Immediate gratification vs. future happiness. Wealth accumulation should be a means to an end, not an end itself. It’s not an all-or-nothing situation, but of course many finance authors don’t mention that.

Suze Orman’s philosophy is pretty smart about this, although she doesn’t usually address this point directly. Michelle Singletary, the personal finance writer from the Washington Post, is the complete opposite. She’ll make you feel guilty for spending $100 to repair a broken dishwasher. I really disagree with many of her opinions, but I guess controversy sells newspapers, because I still read her column.

Suze Orman often recommends choosing the investment option that makes you feel better. For example, when I got a raise a couple years ago, I had to choose between paying down my home equity line of credit, or setting up a savings account as an emergency fund. Technically I “should” have built up an emergency fund first. But I felt more comfortable having less debt, so I paid down the HELOC instead. And since it was a line of credit, if I needed money, the HELOC credit would be available in an emergency. At first I felt like I was making the “wrong” choice, but once I understood that my comfort level was more important than earning an extra hundred dollars, I realized that it was totally the right thing to do.