Why Money Matters: Pros and Cons | RentalEDU (2023)

FAQs

What are the advantages and disadvantages of money? ›

Money allows us to meet our basic needs—to buy food and shelter and pay for healthcare. Meeting these needs is essential, and if we don't have enough money to do so, our personal wellbeing and the wellbeing of the community as a whole suffers greatly.

Having money makes it possible for you to start a business, build a dream home, pay the costs associated with having a family, or accomplish other goals you believe will help you live a better life.

Cash allows you to keep closer control of your spending, for example by preventing you from overspending. It's fast. Banknotes and coins settle a payment instantly. It's secure.

Money evaluates every commodity and service with a convincing value. A person who doesn't want anything in exchange will also be ready to work for someone for money. Money is a durable thing and lasts many years, even if kept unused.

For most people, the answer is a resounding no. In simple and obvious ways, we all need money for everything from fulfilling basic needs necessary for survival to making our wildest dreams come true. But making money should not be the one overarching goal in life, overshadowing everything else we have going on.

Money Is So Powerful Because it Provides People With Power – to Have the Freedom to Do What They Want, Be Who They Want, and Go Where They Want. This is entirely true. Without money, you will have fewer options and freedom.

In a six-month experiment, people who received cash transfers of $10,000 generally reported feeling happier than people who did not receive the payment. A recent experiment suggests that money can indeed buy happiness — at least for six months, among households making up to $123,000 a year.

Money serves several functions: a medium of exchange, a unit of account, a store of value, and a standard of deferred payment.

What are the 7 functions of money? ›

Some 42% of U.S. adults said that money has a negative impact on their mental health, according to a survey from Bankrate. The study included nearly 2,500 American adults and took place between April 6 and 8. Of those who said money has affected their mental health, most cited feeling stressed, anxious and overwhelmed.

Identifying the problem

Lack of income/job loss. Unexpected expenses. Too much debt. Need for financial independence. Overspending or lack of budget.

They found evidence that anticipating paying with money (making the decision to purchase) did indeed activate pain processing regions in the brain, albeit those were associated with higher-order, affective pain, and not somatosensory (i.e., physical) pain.

According to Keynes, people hold money (M) in cash for three motives: (i) Transactions motive , (ii) Precautionary motive, and (iii) Speculative motive. The transactions motive for holding cash relates to 'the need for cash for current transactions for personal and business exchange.

Saving: Many consumers believe paying with cash is better to control their spending. Setting aside a monthly amount for things like recreational activities helps us plan our savings and avoid unnecessary spending. Autonomy: Digital payment receivers sometimes suffer technical glitches.

Paying with cash vs. credit helps you keep your debt in check. It can be easy to get into debt, and not so easy to get out of it. In addition to paying more in total for purchases over time, you're also accumulating more debt if you don't pay your bills off from month to month.

Money isn't the most important thing in the world, but it sure is nice and definitely a necessity. It is also one of the easiest means to help others. The most important thing is probably love.

More Money Matters

In Maslow's hierarchy of needs, the only factors more important than financial security per se and physical safety are our physiological needs for air, water, warmth, and rest — all of which are increasingly dependent on money as well.

Does more money mean a better life? ›

An analysis comparing reported income to reported well-being revealed a strong, positive relationship between the measures. People who earned more money reported greater day-to-day well-being and better overall life satisfaction.

Psychologists have found that money dramatically changes how people see the world. Other researchers have been trying to understand how money impacts interpersonal relationships. The goal of all these studies – past and present – is to find out if money is capable of altering an individual's personality.

It's often said that money doesn't buy happiness, and, in a 2010 study, Kahneman and Deaton show that it doesn't. Nevertheless, most people apparently think that it does. Kahneman and Deaton found that "emotional well-being" is associated with social interaction rather than with higher income.

Wealth can cloud moral judgment

Another study suggested that merely thinking about money could lead to unethical behavior. Researchers from Harvard and the University of Utah found that study participants were more likely to lie or behave immorally after being exposed to money-related words.

The quantity of services and goods that can be purchased with a monetary unit is known as the purchasing power of money.

Money is not just a tool for your financial needs. It is an energy that flows through and around you every day. It can be focused on your goals, or it can be spread out in many different directions. The way you use your money is a reflection of what's going on inside of you.

Most of the findings point to money bringing out negative behavior in people. "The more money you have, the more focused on yourself you become, and less-sensitive to the welfare of people around you," Piff says.

If you can focus on a balance of happiness in your life rather than only on your monetary possessions, you are more likely to achieve better physical and mental health. That balance comes with less stress and will be better for you long term. On top of that, having that balance will be better for your finances.

1 Timothy 6:17 says, “Instruct those who are rich in the present age not to be arrogant or to set their hope on the uncertainty of wealth, but on God, who richly provides us with all things to enjoy.” We all must use money. However, having money or spending money cannot be the end goal.

What are the 6 characteristics of money? ›

What are the six characteristics of money? durability, portability, divisibility, uniformity, limited supply, and acceptability. Objects used as money must withstand the physical wear and tear that comes with being used over and over again.

Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money.

Let's recap: The golden rule is don't spend more than you earn, and focus on what you can keep. Maybe it sounds obvious, but you'd be surprised at how many people don't understand or follow this rule and end up in debt. Look at credit card use as an example.

We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.

Money can't be there for you when you're upset or give you confidence when you're feeling down, it can only buy you things to distract you for a while. No matter how much money you have, you can never replace the love you get from friends and family.

Money Is Not Evil

Clearly, money can be used for purposes that lead to harming others and dividing families and communities. However, money can also be used for charitable and beneficial purposes. Money, then, is a tool and not an object with its own will to do evil.

Money solves specific problems. Housing, food, shelter, transportation, etc.

It's no secret that money and emotion go hand in hand. We work hard to take care of our families, take care of ourselves and save up for the future, so it's no surprise that money is an emotional topic for most people. Money has the ability to impact our stress levels, mental health and personal relationships.

What is the biggest financial problem? ›

Money — including amount of debt, savings and general money management — is the number one stressor for adults ages 18 to 57, according to the 2022 “Stress in America” survey.

First, as we know from the Stress in America survey, financial stress is a very common cause of stress overall and it's more likely to occur if people have lower incomes. But, people with lower incomes may also experience exposure to stress across many other domains in their lives.

In fact, recent studies have shown that the more money you have, the more likely you are to suffer from depression and other mental health problems.

Cash Can't be Recovered if it's Lost or Stolen

It is unlikely that you can recover cash if you lose it, whereas a credit card and debit card can be cancelled and stopped when it is lost. Even if someone manages to get your credit card or debit card and use it to make purchases, the money can be recovered by the issuer.

Three advantages of savings accounts are the potential to earn interest, it's easy to open and access, and FDIC insurance and security. Three disadvantages of savings accounts are minimum balance requirements, lower interest rates than other accounts/investments, and federal limits on saving withdrawal.