Financial independence starts with getting your money life in order. If you give your money a purpose, the order will show up.

woman happily working on laptop at a coffee shop with text overlay "want financial independence? give your money a purpose"Many people do not respect money. It comes in and out of their lives, but they don’t attempt to harness it or to use it for anything besides this month’s groceries and an annual vacation. They don’t give their money purpose, and thus paying $20 extra at the mall or being in debt does not really matter to them the way that it should. Let’s face it, without purpose anything can be squandered.

I am here to tell you that your money needs a purpose. It is not just a vehicle to pay your gas bill each month; it represents an extension of your self. Money represents the life energy you are willing to exchange for it, and it represents the fuel behind your life. Life is not all about money by any means, but without money, your life can become very difficult.

For the time being, let’s stop thinking about money as a green piece of paper and start looking at it for what it really is: your life energy and your future.

Life Energy and Your Money

All of us have a certain amount of time and energy available for trade. Our most common trade is for money so that we can afford to survive, and to one day live the life that we choose. The most common denomination of life energy traded is 40 hours per week, and the median 25 year old + American income is $32,140 per year for this trade, or approximately $15.45 per hour (before taxes).

  1. Think about the sacrifices you will have made for your next paycheck: being away from friends and family, perhaps boxed inside without a window (that’s me!), suffering through a commute, perhaps you will feel under the weather one day but will go to work anyway, sleep deprivation, stress…the list is endless.
  2. Now, think of your purchases in terms of the amount of life energy that goes into them: Using the example salary above, a $14.95 book purchase will cost me almost one hour of my life energy. A $14,000 used BMW will cost me approximately 906 hours of life energy, or 23 workweeks (if paid for in cash). A $250 new desk will cost me 16 hours of life energy.

If you make more money than the median, each purchase will cost you less in life energy. If you make less money than the median, each purchase will cost you more in life energy.

When you use this method and truly begin to think about the amount of energy that goes into your money, then you can more easily prioritize your spending. Some things will be truly worth a purchase, while other things will become completely worthless in your eyes.

Psssst: For more information on this, I HIGHLY recommend the book Your Money or Your Life by Vicki Robin & Joe Dominguez.

Fuel Your Dreams

Money is not the sole fuel behind your dreams and future aspirations, but you will need money to do just about anything that you want to in life. If you want to have children, move out of your parent’s home, globe trot, join the peace corps, live independently of others, start a foundation to help those in need, retire on a yacht, etc., you will need money to accomplish this. So not only does your money represent stored energy from your job, but it is also what is going to fuel your future endeavors.

In this sense, think of your saving account as a battery: it is storing up your life energy to be used in the future in a way that you choose.

This should have a huge impact on your purchase decisions, as each purchase that you choose to make is X amount of dollars less that you will have for your future goals.

Do you want to fuel your future dreams with a triple A battery, or with a car battery?

Giving Your Money Purpose

The way that you use your money should be a natural extension of you: your thoughts, your dreams, your goals, your values, etc.

If you are currently spending money without your purchases reflecting these important values of yours, then you are squandering your life energy.

Ouch. Really think about that one.

After all, who wants to work 40 hours a week in a gray cubicle only to spend the money that you traded your time and energy to cover survival costs only: food, gas, rent, and utilities? And if you are currently paying off debt, then you are literally spending at least 40 hours per week to pay off last year’s grill. I think we all want more than this.

You want financial independence instead.

Once something has a purpose, it is much more difficult to squander away, which is why you need to give your money a purpose. What if you don’t have any goals? Start to think about where you see yourself in five or ten years. Don’t sell yourself short: you can have or do or be whatever/whomever you want to no matter what kind of money you were born into, or no matter what kind of current financial circumstance you are in. Don’t let the fear of money keep you from seeking your true dreams.

Here are some common goals:

  • Emergency Fund
  • Retire by Age XX
  • Travel to _______
  • Purchase a Home
  • Have a Baby/Add to our Family
  • Open a Business

Some of our own personal goals are to retire with dignity, to continue to travel the world, to travel to Alaska next year with part of our family, to have an eight-month emergency fund, and to pay for everything in cash. By having these dreams and goals, we are able to prioritize our money and to give it a purpose. Our paycheck/life energy is divided up into different categories, with a percentage being used to live on today, a percentage going towards our long-term goals (retirement), and a percentage going towards our short term goals (Alaska and emergency fund). It is much more satisfying to us that we are using our life energy to obtain money that is being used to fund our goals and values.

What are some of your goals? What does financial independence look like to you?

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Amanda L. Grossman is a Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 10 years, her money work helping people with how to save money and how to manage money has been featured in Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here.
15 replies
  1. Trent Macdaniel
    Trent Macdaniel says:

    Hi, I’ve been a lurker around your blog for a few months. I love this article and your entire site! Looking forward to reading more!

    Reply
  2. mike @ mortgage help
    mike @ mortgage help says:

    Giving purpose for money?I think its main purpose is to buy/pay for our basic needs.
    Sometimes I don’t think on where my money goes.That’s why now I will bring a list when I go shopping or having a grocery so that I may not went out of money after that.

    Reply
  3. Jenna
    Jenna says:

    My big financial goal currently is focused around buying my first home. Started the house hunting processes and now waiting for the “right one” to come along.

    Reply
    • FruGal
      FruGal says:

      What an exciting time! Thank you for sharing. We purchased our first home in September 2009, and could not be happier. Definitely a learning curve, but for us, it’s been well worth it.

      Reply
  4. krantcents
    krantcents says:

    Maybe it is an old wives’ tale! If you look at someone’s wallet and the money is stuffed in there, the owner does not respect money. In respect to that, I do not carry any money! Not really.

    Reply
    • FruGal
      FruGal says:

      Hello krantcents!

      Hahahaha–that made me giggle–I am notoriously horrible about never carrying cash in my wallet. Paul gets annoyed sometimes because if we need a few bucks for parking or “cash only” places, it falls on him to find an atm.

      Reply
  5. Melissa
    Melissa says:

    I recently started rereading Your Money or Your Life, so this post resonated with me. You made me laugh when you talked about working to pay off last year’s grill. So true! Thanks for another motivating post.

    Reply
    • FruGal
      FruGal says:

      Hello Melissa!

      Thank you for following my series. I LOVE that book, and highly recommend it to everyone. In fact, I think I may read it again as well!

      Reply

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  6. […] and then taking a look at my “for keeps” accounts, I just felt plain angry. We just discussed paychecks in terms of time and energy traded in exchange for money. I think back to all of the stress, the time, the energy, and the heart and soul I have put into my […]

  7. World Spinner says:

    Give Your Money a Purpose – Frugal Confessions…

    Here at World Spinner we are debating the same thing……

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