Why More Money will Not Solve your Problems

“Only when we are content with little will we learn to do better with more.”

Sometimes we wish that we could hit a jackpot on the lotto so that all of our problems can be fixed.

Sometimes we wish that we had a better position at work for higher pay, thinking that might lead to a better life not just for us, but for our kids.

Other times, we wish we just made a few hundred extra each month or, that our spouse worked so that we could do more, easier, instead of struggling paycheck to paycheck.

I got it. We all need to pay for things, and a job is essential for helping us do that. But… there is a caveat.

If you are hoping that a new job will give you the extra pay you need to help your family, you may be surprised to know that a job with higher pay may not do much to help you. In fact… you may also be surprised to discover that a relatively generous raise this year might not even be able to do that.

No matter how much people earn, they tend to spend it all and more.  For a good majority of Americans, expenses seem to rise with income, and although most of us are making quite a significant amount more now than we were at our first job, somehow we still aren’t making enough.

If you find that you just can’t get a grip on your finances enough to pay down your debt, start a college fund for your kids or, even put together an emergency fund for yourself, you are not alone. Millions of Americans struggle paycheck to paycheck with the same issues, and no matter what their wage, it never seems to be enough.

Disparaging to come, it’s the norm for most – and what we attribute to simply not making enough to pay for the things we have is commonly referenced as Parkinson’s Law.  Parkinson’s Law says that expenses will always rise to meet income, and is the reason why most people are having a hard time paying their bills or, even making a dent in your huge pile of debt. In these cases, money may not be the answer – in fact, it is not the answer.

While I know this may sound illogical, it really is the truth.

In most cases, money problems such as paying off debt, saving for college, saving for an emergency fund, and paying your bills, are behavioral.

Most people would agree that personal finance is personal – after all, it’s up to you to develop habits for spending and saving your money. Your actions determine your success – at least in most cases.  

Two of the biggest problems the average American deals with are spending too much and saving too little. It’s not overly complicated, yet our financial choices are the result of behavioral problems.  Behavioral choices can’t be fixed with more money – in fact, more money just covers up those problems temporarily without fixing the root cause.

If you don’t agree, just look at those wealthy individuals who file bankruptcy – some of them not just once, but several times over. And yet still, they can’t seem to win with their earnings.  And while we all need money for common everyday living expenses, money itself seems to exploit who you are already: the mismanagement behavior that surrounds you only becomes amplified with more money.

In fact, you may fall into any of these 3 categories:

Money worship: Purchasing material items gives you a feeling of security, relief, and satisfaction – shopping and purchasing releases the feel good chemical (dopamine) that provides short term pleasure. Eventually that pleasure wears off .. and makes you feel like you should be looking for another opportunity to purchase something to satisfy a craving.

Money avoidance: Instead of facing the reality of your finances, you try to avoid them completely – you feel tremendous guilt when you purchase and although your purchase habits are still unhealthy, you avoid looking at the statement or the bill because you are in denial about the nature of your problem.  You likely do spend, and do so without thought, but you don’t want to be held responsible for the outcome.

Money lies: When you lie to your partner or spouse about your purchases that are made outside the scope of your agreed-upon budget and marriage. Money lies also covers giving money to those when not in their best interest – enabling friends and family who should be able to support themselves, jeopardizing your financial goals.

So what is the best way to overcome those behavioral problems and improve your relationship with money? 

You can start by identifying the problem, then taking a long hard look at your spending habits. Find out where your income is going; ask yourself why you believe you NEED all these things that aren’t life necessities.

In simple form, avoid spending more than you make.

In the end, I think what we all must remember that what we NEED is entirely different than what we want, and unfortunately many of the things we feel like we need are nothing more than our conscience screaming “I WANT!”