Teaching your two-year-old to draw a symmetrical shape is a complex affair, your money life needn’t be so. Our daily interactions with money may not amount to much or even make us think twice, but when we accumulate money experiences over longer periods of time, there is a deeper impact on our lives.

More often than not we tend to get caught up in a cycle of expectations and signaling. Expectation that wealth will keep accruing as time moves and then it becomes about using our wealth to signal social status. Then come complicated investments in a bid to chase higher returns, loans to cover up for what we can’t afford and stress as we chase more work to maximise earning that shows us in an enviable social status.

Let’s pause here and see if there is a way to perhaps, simplify our money life rather than moving through time making it more complicated.

Don’t use money as a signal for status

This is a very common phenomenon, to use money as a signal of status. We are all guilty of this at some point in our lives. It may be the wedding jewelry which now lies neatly tucked away in a locker, or the expensive handbag you have used just twice or even in the three bedroom flat you had to take a 90% loan for.

It’s subconscious sometimes, but even the new clothes that make us feel fresh are somewhere a means to show affordability. Marketers and manufacturers understand this very well and hence, you will find several price points for similar products. For example, you can buy a white, cotton T-shirt of similar quality for ₹100 or ₹1,000 or even ₹10,000 and any price in between. What price will you buy it at? Why does everyone not buy it at ₹100? Subconsciously, as our earnings and wealth grow, we take to signaling through how we present ourselves. A big part of this is what we spend on clothes, shoes and accessories like jewelry and watches.

This desire to signal status also pushes us to have lavish weddings, buy luxury cars on loan and towards other kinds of unaffordable purchases. A 2019 report by ICICI Bank and CRISIL Ltd has estimated that retail loans usually taken by individuals for personal spending will double to ₹96 lakh crores by 2024 as compared to ₹48 lakh crores in March 2019. It shows that we are likely to keep taking loans to fund our spending. When we can’t afford the things we buy, we take a loan. The reason we buy things we can’t afford is to have the illusion ourselves and for others to see that maybe we can afford it.

The only way to move away from this vicious cycle is to stop using money and the things money can buy as a signal for your status.

Simplify your life, loans and debt can complicate it because they tie you down and increase your expenditure rather than reducing it.

Don’t chase money as a solution to your problems

Doing this never works. Money is not a solution to anything; it is a means. For example, you may think that the solution to your poor heart health is medical treatment and hospitalization which of course requires substantial monetary support. Hence, having enough money is the solution. However, in reality the solution to your poor heart health is a healthy eating routine and good, regular exercise; these two aspects don’t need a lot of money.

Think of any other aspect of your life and you will realise that while money can be a facilitator, it is not the solution, not the answer.

What this means is that you have to make time in your life for things that matter, for solving problems without only focusing on chasing more money.

If the focus is always on money, then the pressure to keep on adding more will start to build up. If you are using this money to find solutions which cannot really be addressed with it or to signal status, no amount will ever be enough. Eventually you will just achieve one result, stressing and tiring yourself out. 

Simplify your life and your lifestyle, money is not the answer to your problems, rather focus on what you desire to do in life and ensure you make your money work hard.

Don’t be a miser

Having understood that chasing money is not ideal, we must also understand that hoarding it can get complicated too. A miser is not a saver, rather someone who cuts back on spending due to an unreasonable insecurity about losing money.

While saving is a good habit, being miserly isn’t. It will make you hoard money in unproductive ways rather than focus on wealth creation and efficient investing. It will also prevent you from using your funds where they can be of use to others.

You may have more than enough to satisfy your lifestyle and don’t need to access funds kept away, but there are others who can use your help.

Using your money to help others and to share what you have will work its magic in bringing you extreme joy and satisfaction. Holding on to your money for dear life can potentially do the opposite.

Often close family will start to resent your miserly ways, you may even fall out of favour with friends. Stress of losing money can complicate your daily transactions too.

Simplify your life and understand that wealth and riches are not something you must get attached to. Shed your miserly ways and share more to experience joy in life.

Life and money are intertwined such that you must face money matters on a daily basis. The complexity may not be visible clearly at first but over time things will get clearer. The world we live in seems to get more complex with each passing year. Let’s make small attempts to reduce complexity in our own lives and focus on how simplicity can achieve greater outcomes.