The Law of Commitment

Respect for money may not be a hot topic of conservation when it comes to financial discussions, but the fact that most people have not learned how to become responsible with money, and cannot see themselves as responsible, creates the money guilt that discourages them from taking the steps that lead to prosperity.

It is vital to understand what money is and how it relates to our life in general if we want to be successful with our money.

This subject is more clearly understood when it is seen in the context of the second law of money, the Law of Commitment, which describes our relationship to money in this way:

Money is a trust that we must choose to manage wisely, productively, and honorably for our own good, for our families, and for others.

While it will evolve over time, from the very beginning of our quest to become successful with our money it is important to establish a basic idea of our personal relationship to money.

The Meaning of Money

Initially ask yourself the very general question, “What is money?” Some people think that any money they have is simply a fortunate possession to use as they please. As they see it, it is no one else’s business how they choose to spend it.

Others, incredibly, always think about what others would think of any expenditure they make as if they had no right to choose for themselves how they use their own money. They can’t even buy a dress or a tie without seeking out someone else's approval.

Some people spend money on anything they want at the time with no regard for essentials. Then they end up getting their phone disconnected or their home in foreclosure.

Others only spend on necessities and have no personal satisfaction from buying something they really want. It makes no difference that they truly deserve to be able to do so because they have earned the money with their own hard work.

Some people spend all their money on themselves in a very selfish manner. Others feel guilty spending on themselves and sacrifice themselves completely for others (often this includes the expenditure of their time as well as money).

But while most people experience all of these attitudes without going to extremes, very few people have discovered an appropriate balance. Perhaps more important, even those who may be balanced in the way they actually use their money often feel little sense of achievement or satisfaction as a result.

Why not? Partly because they do not have a basic view about what money's purpose is in their life. And partly because they have gotten in the habit of buying on credit so much that they rarely buy with money they feel they have earned and have a right to spend.

Success with money begins when we learn to respect money. When we have respect for money we are able to take seriously our need to be responsible with money. When we are responsible with money we escape money guilt and can feel confident in our financial decisions.

Think about this. Assuming that you acquire your money honestly and honorably, you get your money by working for it (or from a parent or other person who did). Time is limited. Therefore, any money you have represents a portion of someone's life, usually your own!

Whether you have ever thought of it this way or not, in most cases you have literally exchanged a portion of your life for the money you have. And sooner or later you will realize how little time you have on this earth.

So every time you buy something, whether a physical thing or a service, you are giving up a part of your very short life for that purchase. If this is beginning to sound a little melodramatic to you, hang on a bit to see where we are going.

Meaning of Having Respect for Money

When I first heard people talk about having “respect” for their money, I thought it was a strange word to use in that context. Now that I view it in the light of this basic law of money it makes perfect sense.

Before going farther, let me point out that being serious does not mean being sober. Quite the opposite.

If you were the manager of a trust whose purpose was to help educate disadvantaged inner city children you wouldn’t think of it as a burden but as a privilege. You would probably get excited about the opportunity and look forward every day to the new and exciting things you could achieve.

Think of your own opportunity to manage your personal affairs in a similar way, as a great privilege. In fact it is just that!

When we consider the laws of money there are many issues that we could address related to each one. This one is no exception.

For example, at this time we could consider how we can know the wisest use of our money. Or what it means to use money productively. Or honorably. I encourage you to think about each of these implications.

But at this time I would like to focus our attention on this central idea that it is essential for us to think of our money as a trust. Our goal is to understand how becoming successful with money requires us to treat our money with respect.

Who Benefits from Respect for Money?

A particularly important issue for many people in applying this principle is the priority of using our money first for our own long term benefit.

Every public trust is obligated to be managed in such a way that its intended beneficiary receives the designated benefits. You are the primary beneficiary of your income and if you neglect to accept responsibility for your own needs to be met it is very unlikely that anyone else will do it for you.

Obviously this means that we must not just squander our money on useless things. It also means protecting sufficient capital to be able to continue fulfilling our responsibility (in our personal lives this includes building sufficient reserves or savings for emergencies).

A very important but often neglected portion of this responsibility is planning for “retirement” or at least our older years when income from work may be limited. It also means taking proper care of any assets we have invested in, such as a home.

Money Guilt: Misguided Responsibility

There is one specific area I do want us to think about more carefully. It concerns a very serious problem for many good-hearted people.

Most of us have a number of personal responsibilities growing out of our relationships. If we are married we have a spouse to consider. If we have children we must consider them. Perhaps we have elderly parents who have become our responsibility.

But beyond that, our religious and public cultures alike have commonly put upon us a sense of responsibility for others such as the poor and the sick. Many charitable organizations operate totally through donations given by people who feel a personal financial responsibility to support them.

When understood properly our sense of responsibility for others can be healthy and productive, but it is easy for us to let good motives lead to poor decisions that in the end can become very destructive. This rarely proves to be our best choice.

Unfortunately, many organizations have used guilt to manipulate people. They do this to pressure them into doing what they might otherwise have done as a demonstration of gratitude for their own prosperity.

As a result, many people are hard pressed to make the decisions they properly need to make to assure their own well being. They have learned to feel a sense of responsibility for others that exceeds the responsibility they feel for meeting their personal needs. This is not healthy or even helpful to others in many cases.

Money Guilt About Family Obligations

One elderly lady I knew a few years ago lived on a very small social security income, little more than $300 per month at the time.. She told me how her grown daughter only had a $2,000 monthly income so she had to help her out. She placed her daughter’s needs (or perceived needs) ahead of her own.

Many parents feel obligated and are pressured by their children to pay for a car, a college education or an expensive wedding. A distorted sense of family obligation leads many into long term financial stress as a result of unwise, short sighted decisions. Again, these decisions come from putting others ahead of self.

The truth is that assuming responsibilities for children, especially adult children, usually doesn’t help them much but often contributes to making them dependent and deters them from becoming self-reliant. Still it is amazing how many hard working older adults are supporting grown children in their thirties and even forties.

As an aside, you might be surprised to learn that people who pay their own way through college are generally more successful than those whose parents foot the bill. The point is not that you should not help your children with college expenses when you are able to do so, but that you need not feel guilty if you cannot do so and take care of personal obligations at the same time.

Adopting a Respect for Money Attitude

Perhaps you have heard Abraham Lincoln’s famous response when asked the best way to help the poor. “Don’t become one of them,” he said.

The best way you can help others to become effective with their money, especially your own children, is to show them by setting a good example. A part of that example is to resist helping others (including your own children) with resources that you really need for yourself.

Again, please don’t misinterpret my point. There is nothing wrong with helping others. In fact, giving is an essential element in true financial success. But setting correct financial priorities and meeting your own basic needs, including adequate funds for retirement, demand attention before caring for the needs of others.

You have heard exhausted caregivers admonished to get some rest. They are reminded that if they do not take care of their own health they will not be able to continue helping their ill or handicapped loved one. The parallel to our personal financial situations is obvious. Only by taking care of our own finances can we ever hope to really help our families and others we care about.

To be responsible with money you must treat your money as a trust which you manage for your own well being, at least as much as you do for others. When you do you will make better choices in the way you go about helping others at the same time.

And you are better able to do so. Your wise management choices will produce more income, you will save more, and you will have more resources from which to share with those you love and those you care about in the broader community.

Concluding: Respect for Money

The first two laws of money (check out our money laws page) seem to be more philosophical than practical but make no mistake, if our thinking is wrong our actions will be wrong. Evaluate your own attitudes about the role money plays in your life. The way you think will determine your future success, or lack of it.

Keep focused on your key goal, to develop a healthy respect for money and become responsible with money that comes into your hands as an important trust.