Muney – Money is a tool

(The Story of Your Money is the ultimate beginner’s “for dummies” introduction to Personal Finance principles. This series is a primer that will walk you through the very basics and set the scene before you dive into the world of personal moolah management – I highly recommend you start with Part 1 [it will make more sense] even if you’re a pro!)

In my last post (Part 2), I mentioned it’s difficult to get into the “start saving up”, “plan your budget!” part of personal finance before first addressing what money is, why it’s important to you, and why we need to take care in managing it.

When someone asks you to do something (“Go clean your room!”) the natural response – especially if it’s annoying or boring (and you don’t want to do it automatically) – is… Er.. What for? Why should I?


Parents of teenage children, you definitely know what I’m talking about.

I was a teenager myself not too long ago (yeahright) so I don’t want to begin telling you that:

  1. You should live below your means (and spend less than you earn, ALWAYS)
  2. You need to have a proper savings plan and save up for the future

until we’ve had a conversation about what for and why.

(And I’ll give you a better reason than “because I said so!”)

We need to begin with a quick philosophy lesson. I’ll  break this down into very easy, bite-sized pieces and try not to bore you – so please bear with me till the end!

{ Instrumental VS Intrinsic Value }

Woah, big words.

Like the word suggests, something with instrumental value works like an instrument or a tool; the value is in what it can do for you, what it can be used to achieve. It is a means to an end; a way to get you from one point to a desired destination or outcome. A hammer is good for pounding nails into wood – the hammer has instrumental value.


A bicycle is also something with instrumental value; the value and usefulness of a bicycle is judged by its ability to get you from Point A to Point B. If, for example, it would suddenly lose its ability (e.g. the tyre is flat, the gears are busted) the bike loses its instrumental value. A hammer that cannot pound nails into wood (e.g. the handle is broken) also has no instrumental value.


Intrinsic value on the other hand describes something that is inherently valuable in its own right, as it is. In basic terms, it has value in simply existing. So if you have something with intrinsic value, the fact that you just have or possess it is valuable, even if it does not necessarily propel you towards a desired destination or outcome (like a tool or vehicle, with instrumental value).

I would argue very strongly that education for instance, has both intrinsic and instrumental value. Let’s explore this example quickly:

“Getting a University education is important so you can get a job which pays a fairly high salary.”

This sentence describes a university education as having instrumental value; if you have a degree, it will act as a tool/vehicle and help you earn a high salary.

But does education only hold instrumental value? If an education is not able to get you a high-paying job, is it useless? Like the hammer with the broken handle? Like the bike with a flat tyre? OR does education have value irrespective of whether it gets you a high salary or not?

Allow me to test you (and your value judgment) with a real-world example:

What is your opinion of a young lady who chooses to get married and become a stay-home-mother, shortly after graduating from University?

A) Her three years at University was a big waste of time. Pedah saja blajar lama-lama, inda jua beguna. Sayang saja duit, buang masa. (Loose translation: No use/point. Waste of time and money.)

B) It’s her choice; she’s clearly a smart lady and is old enough to make her own decisions. Maybe she wants to settle down and start a family. If that’s what is important then good for her! Plus, a well-educated mother could very likely raise equally successful children. And a University degree doesn’t have an expiration date – if she ever plans to go back to work in the future, those options are still on the table.

C) An education was such a stupid idea to begin with. Who the heck wants to waste time sitting around in school?

If you answered A, you see education as only having instrumental value.

If you answered B, you see education as having both intrinsic and instrumental value.

If you answered C, there is a little ‘X’ in the top right corner of your screen – please click that now.

{ Money has instrumental value }

Like the sub-title above reads, money has instrumental value.  Realizing this, appreciating this, understanding this is an essential cornerstone of good personal finance.

Money is a tool.

In Pt 1, I walked you through Mamat’s story – he requires money in order to get/buy/obtain all the stuff he needs and wants. It is clear that money is a tool which allows Mamat to live the life he desires (a life with food, toilet paper, a gym membership, a family, etc.)


I will drill this into you one more time: 1) Mamat wants stuff in order to live a great life 2) Money is the tool he uses to get his stuff 3) He ends up getting a job to earn the tools (to get his stuff).

Mamat doesn’t want money just for the sake of having money; to hug it in bed every night before he goes to sleep. There is no intrinsic value in just having it, and Mamat knows that. Mamat understands that the money he earns has instrumental value – it can be traded and exchanged for the stuff he REALLY wants to live a fulfilled life.

People who believe money has intrinsic value become Misers.

Misers are people who hoard wealth and spend as little money as possible; they become obsessed with accumulating money (for the sake of it). These people can be described as cheap, cheapskates, stingy, karit. And being a Miser is not a positive thing. Unlike Mamat, who desires fairly healthy “stuff” in order for him to lead a fulfilling life, Misers only desire money – piles and piles of it – to bury in the ground or hide under a mattress. “Gila harta” is another term, loosely translated to “crazy over wealth”.

Sensible personal finance is not about trying to accumulate (or save) as much money as possible, it is not about mindlessly obsessing over every single cent and dollar. Being careful with your money does not mean being an extreme cheapskate.

Life is not about who earns or collects the most money – you cannot take your riches to your grave.

The goal should be to live a fulfilling life dedicated to activities, things, and people you care for most and are most important to you. Money is merely a tool to help you achieve this life. Money can buy many, many things – in fact, it CAN buy you happiness. You just need to know how to use it the right way. Money is not happiness, but it certainly can help you towards achieving it.

It is imperative to realise money’s instrumental value and learn how best to use this very powerful tool. After all, the true value of money lies not in what it is, but in what it can do for you.

Okay, mosey on over to Part 4 now –>


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