The Marginal Utility of Money

“Nothing is enough for the man who enough is too little.” Epicurus

I keep in contact with a few of the people I met while working overseas.    Some have become close friends and others are part of a network of expats who feed each other potential leads of various projects going on around the world that someone may be interested in.  With my background as a paramedic I am sometimes contacted with information on a job requiring medical support.  Having experience in overseas work as a medic makes it much easier to find potential prospects than it was before when I had no experience overseas.  A couple of weeks ago I was contacted and interviewed for a job working overseas again.  The interview went great and although I didn’t accept the offer I now have another contact with  a company that constantly has new contracts coming in.  The benefits were good and the pay was just over 100,000 so why would I not take such an offer?  Some of you may totally understand that leaving home is worth no amount of money and others who have been bitten by the wonder lust bug may have jumped at the opportunity for half that amount.  Having done it before primarily for the financial benefits it would now take something much more motivating than pecuniary reward to go abroad again.

This house has turned out to be a really big project.  I knew it would, but I don’t think I fully appreciated how I would feel working on it.  I’m only moderately joking when I say I can barely swing a hammer and not sure which end of the tape measure you read.  Emotionally I’ve went from the excitement of the pre-closing era to the overwhelmed feeling that has consumed me for the past three weeks.   I think I’m finally moving past that phase into acceptance and the belief that everything will be ok.

I haven’t been at all motivated at work for several months now and buying the house has taken what little focus I had completely away.  I thought about resigning, but after talking with my supervisor decided to take a six-week leave of absence.  This will allow me to put forth a lot of work directly on the house and have it closer to livable status.  Hell, it’s going to be more like live in camping when I move out of my apartment next month!  I may not have planned this move the best way possible, but screw paying rent!! :-)  The next several weeks off will be really nice and I’m super happy about it.  I plan on doing a few local trips as well as using the time to decide what direction I want my life to go…

The two examples above lead to the main point of this post; the marginal utility of money.   I first came across this topic from a guest post over at MMM where the writer of the blog Brave New Life discusses the idea of marginal utility as applied to money.  I’ll let you read his post at MMM for all the details but the main idea is this; money looses its utility beyond a certain amount.  In our society we need a certain amount of money to make an exchange for goods and services.  The basic needs of food, shelter, and clothing have to be met then we have a few other items we would like and I guess you could extend this a bit further and apply money to a few luxuries.  When money covers these things any amount above and beyond just doesn’t have much usefulness in our lives.

Some may dispute this fact and argue that there is no limit to how much money is enough.  They may say that you can always have a nicer house, better car, brand name clothing or if nothing else save more.  I’m not going to attempt to argue against this because in every life at a particular moment the need for money is greater or lesser than in other lives or at other moments.  When I was broke, divorced, and bankrupt you would have never convinced me that a few short years later I would be writing against the constant need for more and more money because at that time when I had debt up to my eyeballs and no savings to speak of I needed all the money I could get!  So it is for each life and where you mark the marginal utility of money in you own life is determined by your obligations and how much money you believe is needed to live a good life.

In the book, How Much Is Enough: Money and the good life an argument is made around the premise that there is such thing as enough when it comes to money and we would do well to consider it in our attempt at living a good life.  The book is based around the thoughts of John Maynard Keynes, a British economist and one who believed that it was possible that we would be on our way, by 2030, to working a fifteen hour work week.  Yes you read that right; fifteen.  So what the hell happened, cause nobody is coming close to working a fifteen hour work week!  This is what the first two-thirds of the book deals with and for me were the most enjoyable parts of the book.  Keynes believed we all would be enjoying more leisure and less work because of advances of technology and the realization that we would learn, are you ready, the marginal utility of money and that money would only be useful up to certain point and once that point was reached you were doing a disservice to yourself by attempting to earn ever greater amounts.

I’ve come to realize for myself I don’t need more money, I need more time to enjoy leisure.  This is why I left a really nice paying job last year and why I turned downed a 100k job this year.  It is also why I took six weeks of LOA, so I could do other things with my time.  It is why I will continue to shape my life in a manner in which less and less money is needed to live  a good life.  I don’t need a high paying job and I don’t need large sums of money in savings.  What I need is a life lived with purpose and intent.  What better way could we live this life?

6 thoughts on “The Marginal Utility of Money

  1. It’s unfortunate that more people don’t seek to make the Keynesian vision of shorter workweeks a reality. Overall the world is awash in more wealth now than it ever has been at any point in history. However wealth inequality contributes to the need for so many to continue working endless hours — the majority of people are working just to make ends meet, not to accumulate additional luxuries. Unfortunately it seems that due to a lack of spending discipline and knowledge about saving and investing most people are stuck on the endless treadmill of working and spending.

    What I don’t understand personally is why so many at the top continue to work as long as they do. It must be an ego thing, because they certainly have more than enough money to ever spend it all. Why is Warren Buffett still working? Honestly I’d expect more of them to follow the pattern of Bill Gates (work for a while, earn a fortune, then step back and do whatever fills your life with meaning). But he seems to be the exception among the super wealthy as opposed to the rule.

    • Executioner… Being able to say no to money is not natural or if it is that tendency has been bred out of us over the past several thousands of years of domestication. When I first returned home last year I was suffering from a lack of direction (it hasn’t improved) and while discussing this with a friend the question was asked why not go to grad school. When I said I really wasn’t ready to go back she said you should and I said why and the response was for more money and my reply was I don’t needed more money, which was followed by a blank stare and the concluding comment, you can never have enough money. Never? Sorry, I have to disagree. Whatever direction my life is heading I know it is no longer about chasing $$$.

      It really comes down to curbing desires. Once you have this mastered life takes on a different hue. I think most people are stuck, as you said, because there is really no discussion of what a successful life is outside material possessions. That is what I most enjoyed about the book, How Much Is Enough: Money and the Good Life, it attempts to have such as discussion and I believe it is worthy one. What is your idea of the good life and what is your enough point???? If I don’t see it as a comment I would love to read a more lengthy description of it on your blog.

    • McD… That is a great philosophy to live by. I have this annoying habit of always thinking about how much time I have to work to pay for an expense. Rent was something I would always do this with and it annoyed the hell out of me! Maybe I’m just getting old, but life seems to be about more than just nicer stuff. Past the point of utility is there really much need for a more expensive item such as shelter, clothing, food, etc.? My answer is no and that is where advertising comes in, the “manufacturing of want”. I better slow down, I think I read somewhere you were in marketing. I may be treading on sacred ground. :-)

      Glad you hear you guys are closing tomorrow. That has to be super exciting!

  2. Stoic,

    Couldn’t agree more! I realized a while back that by retiring so early in life I’ll likely be giving up millions of dollars in earnings, and the compound interest those earnings could turn into.

    But what does millions of dollars mean to a guy like me? Not much. I want time, and when I have enough money to buy the rest of my life out I’m happy. What could you possibly want to own more than your time? I’ll never understand that.

    Life without purpose is not a life at all.

    Best wishes!

    • DM… It takes a strong commitment to purpose to turn down millions of dollars, but I think once you begin to view life as being about more than the accumulation of stuff it becomes easier to know when you have enough. You obviously have this figured out and it shows in your decision to only work for the amount you need and then to turn your attention to enjoying the time you do have.

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