Money Vs. Wealth: 3 Reasons Why They Aren’t the Same Thing

By Bryan M. Kuderna

When most people hear the word “wealth,” money immediately comes to mind. There are wealth management firms like mine, overseeing trillions of dollars of assets under management. There are shows, podcasts, books, and magazines galore touting how to build your wealth through the latest investment trends. Even those in pursuit of balance preach healthy and wealthy, as if they are two distinctly separate goals. The world is conditioned to associate wealth with being rich.

The etymology of the word “wealth” comes from the Old English word “weal,” which refers to a state of well-being. Even going back to the Bible, weal is often referenced as a sound or healthy state. Notice that nowhere is there mention of money, investing, or finance.

It’s worth exploring the crossover point in which well-being came to mean financially successful. The connection isn’t by happenstance, finances certainly carry enormous weight in affecting the prosperity of a person, household, business, or government. But wealth is a state of mind, a unique personal definition, the sum of countless variables, of which money is but one.

3 reasons you should disconnect wealth and money

Reason #1: Money can own you

Having personally advised thousands of professionals from all walks of life over the past 15 years, I can vouch for the power money wields over its pursuers. While those who do not respect or care about their finances are bound for disaster, people on the other end of the spectrum risk another type of demise. The United States has been the richest country in the world for decades, yet according to the World Health Organization (WHO) has long been
one of the most depressed countries, in terms of mental and behavioral disorders.

There are
studies that show once a certain income threshold is crossed, increases in income are correlated to decreases in mental health. Some might argue that when one doesn’t have problems, they must think up problems (i.e., the real financial problem is eliminated so a novel mental one is created). However, it can’t be ignored that chasing money for the sake of itself can require important sacrifices in real well-being, only leading to a sense of emptiness once the monetary goal is reached.

Other side effects of putting money on the top pedestal can include poor work performance. The philosophy of care every company hopes to practice with their employees or customers can be shoved aside to make or save a few more dollars. At worse, blind pursuit of money can lead one to take corrupt action. I often talk about the three I’s needed for career satisfaction (income, independence, and impact). When income is the only one that matters, people can get trapped in the wrong profession without any independence or impact to appreciate.

On the financial planning side, money is at the route of people falling prey to “keeping up with the Joneses.” The urge to showcase financial status in competition among peers can force one to live beyond their means and wreck their budget. Lastly, once money has taken full control, it can breed an irrational investor. This type of investor may constantly watch their portfolio and begin making short-term emotional choices that deviate from their original strategy.

Reason #2: Money takes time

Making money takes time. Time is considered the greatest asset of all—here today but gone tomorrow. There is only so much time in a day, in a week, and in a lifetime to balance relationships, hobbies, exercise, and health. The saying, “People can spend a lifetime wasting their health chasing their wealth, only to end up wasting their wealth chasing their health,” is partially true. If real wealth were the goal, this would not be the case. Money may not rhyme in that line, but it would be the correct choice of word.

More than two thousand years ago, Aristotle summed it up nicely in saying, “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.” Perhaps including wealth was a mistake in the translation, but this famous quote underscores how a mound of currency and mound of dirt carry no different value until they can translate into some improvement in well-being.

Reason #3: Money dies on its own

Money is undoubtedly an integral part of wealth. But it only makes up one letter in “MICE” (Money, Ideology, Compromise, and Ego), the acronym that governs human motivation. Similarly, it provides context around the price of every transaction, but hardly helps when evaluating the costs and values inherent to choices.

Money can’t survive on its own, it needs somewhere to go, or it dies. There need to be goals to feed the balance sheet, to motivate workers, companies, and investors. As a financial advisor, when getting to know the goals of a client in our initial discovery, I don’t think I’ve ever heard someone simply say, “I just want more money,” and truly believe that was the life goal. The answers always involve goals such as retirement, funding college, buying a home, traveling, and other end results.

Economics invades every subject that matters, whether micro or macro. Money by itself has never solved issues like entitlements, education, tech, environment, war, and religion, but generating mutual wealth within these domains has routinely led to progress. So, just as investing is one part of financial planning, financial planning is one part of wealthy living.

Company: Kuderna Financial Team

Website:
www.kudernafinancial.com
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