I want to talk about some bigger issues before getting down to the nitty gritty; so I’m going to start my blogging life here with some of my thoughts about the value of money.

Just as Canadians have a thousand words for winter, we also have a thousand words for money. Leveraged assets, mortgage debt, civic bonds’¦ we have very specific terms for money and its various states of ownership, liquidity and temporal state relative to us.

And then, on a personal level, we’ve got our guilt money and our fun money, our treats and our responsibilities. We learned money from our parents and live in a system soaked with its presence, and yet few of us have any formal training about how it works or how to use it. We lie awake at night thinking about it, it is the most common cause of disagreement in relationships, and yet we often don’t share financial details with our closest friends. We are, in short, very weird about money. Even weirder than we are about sex. This kind of thing interests me and I’m probably going to talk about it a lot in the future.

It’s easy to be overwhelmed and back away from money. It’s also easy to get obsessed with it. It’s the exactness of it – those deceptively specific numbers look like they really mean something. Take $1,145.22. What does that number mean? Well, that depends on whether it’s your regular payment for a hard week of work or your year end bonus. Is it a wad of cash in a wallet you just found or lost on the bus, or your inheritance from your lover’s recent death? Is it what you owe on taxes or what you give to charity?

There’s an economic principle that money is fungible, which simply means that the whole point of currency is that one dollar in the economic system is equivalent value to another dollar and so they can be treated interchangeably. I closely follow the growing body of work of behavioural economics (that combines economics and psychology) to demonstrate that this is completely wrong, at least on a personal level. We don’t treat all money the same way. See the sample $1,145.22 above for proof. I take it a step further and believe that, actually, this isn’t an example of our irrationality, but that the concept of fungibility isn’t entirely true. Our first dollar really isn’t as valuable as our last. Some money really is easy come and easy go and that’s okay. This reality is not an accurate or precise valuation in economic terms, but it sure is true in life terms. I don’t think the goal of economic psychology should be to point out what idiots we are, but to illuminate money’s meaning and function in our lives and then provide us with ways to live more fully.

I also think that cash isn’t as fungible on a macro scale as the theorists would have us believe. In theory, a company should award contracts to the lowest, reasonable bidder but in practice it has much to do with who is bidding and what kind of gifts they send to the selection committee members. Capitalism works on the profit motive in theory, but that in reality the existing oligarchies have social ties and connections of mutual support, and this plays as much a role in who gets money as any theoretical capitalist advantage like competitiveness and economic strategy. This factor is why corruption is such a huge factor in economic life, and why you need public scrutiny and legislation to keep this problem in check.

I think frugality is about the value of money, on a personal level, .It’s one of life’s major resources along with time, knowledge, courage and love. We have to learn how to balance them out in our lives to function successfully. Money embodies too many contradictions to not think about it more deeply. We all have issues about it and, over time, I’ll show you mine if you return the favour and show me yours. If you want some well-researched and wide-ranging musings on this issue, I recommend Margaret Atwood’s recent book called Payback. From money experiments with primates to Biblical parables, she covers an eclectic tour of this strange and contradictory territory we call money. Or maybe finances is a better word. Financial emotions? Money feelings? Isn’t it funny that with a thousand words for money and I can’t think of a really good one to describe the way we each have a life, a relationship and a personal history with money. I can easily talk about my sex life but not my money life. What a strange piece of the puzzle to be missing.

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