Types of Money

The Three Types of Money
  1. Survival Money
  2. Flex Money
  3. Life Money

Typically we are taught to think of money in even more complex and cumbersome ways.  We are told to set aside money for a rainy day, to invest for the future and to get a better credit rating by carefully controlling our debts.

But all of that is really a different category of money.  That is taking money out of your day to day living and enjoyment and setting it aside for the future you rather than for a happier today.

The one that might not even be alive.

I do all that too...debt reduction/saving/investing... but I make it a point to spend most of my time, energy and money on the now.  And the key to living better with money now is to think of your money in categories.

Types of Money - Survival Money

The first category is survival money. This is what you need to survive. You have enough of that otherwise you wouldn't be surviving. You may want to have a lot more so that you can survive better. But at least you are surviving. Frugal living takes on the most importance the less survival money you have.

It is in your best interest to organize your life so that your survival money needs are not great and that you earn quite a bit more money than your survival money needs.


From James Altucher

Why I would rather shoot myself in the head than buy a house.

It is also in your best interest to avoid committing yourself to massive debts to pay for things that you really don't want.  Keep your types of money flexible and in your control.


Types of Money - Flex Money

The next of the types of money is what I call Flex Money.

This is the money you have available that is flexible. You will enjoy your life a lot more and your stress level will be very low if you have some of this flexible money.

It is not for normal monthly bills and normal expenses such as food and gas. It is not for investing for retirement, or your kid’s college or other large future expenditure. It is not even for fun. It is for whatever is needed at the time.

Here is one of my stories from years ago to illustrate Flex Money

My ex-wife called the other day. She said she needed 2 checks written out for the kids and she was out of money. The first check was for $10 for my daughter’s upcoming field trip.

The second check was for $40 for the kid’s school lunches. I had enough money in my checking account to just write them out and give to her.

She is really supposed to be paying for those types of things with all the child support she is getting from me, but what can you do? The field trip is important to my daughter and the kids need to eat.

My daughter also needed some school supplies. We went to the office supply store nearby and I bought what she needed. It totaled about $20. Again, this should be a child support expense.

I also bought some things that I needed for winter. I bought some ice melt salt and a snow shovel.

My idea of simple living does not involve arguing with my ex-wife about $20.

I like to be in a position to just have this extra Flex Money available when it is needed.

Obviously, the biggest thing to have plenty of money is to make plenty of money and not spend it all. Keep a bunch of extra cash in your wallet and keep a few hundred dollars in your check book. A better, happier life requires that you keep some money flexible.

Flex money is the excess money you have a little bit beyond what you need to survive. This money is that extra money you don't spend right away or pay normal bills with or invest with. It's the money that is handy to have for whatever comes up. It is a few extra 20's in your wallet. It is a few hundred extra in your checkbook. It is the change in your car and the money in your drawer.

It is so nice to have this flex money for whatever comes up. Having it will lower your stress level.

Types of Money - Life Money

The last of the types of money is category is what I call Life Money.

Some people will claim that you don’t need much money to live, that you should be happy with what you have, that others have it worse, that the best things in life are free and...all the other crazy things you hear from people who are just kidding themselves.

There isn’t any situation where having extra or excess money is a problem.  Mos of everything good in the world is a result of extra money.

I feel really good about myself whenever I have extra money. I feel powerful, energetic, friendlier and more generous.

Where would we be without rich people building the libraries, churches, parks, pools, schools, grand buildings or the beautiful houses?

This is my favorite of the types of money

Even love can be enhanced with money. People don’t break up over money; they break up because they aren’t compatible.

They don’t treat each other properly. Not because there is too much money. It’s the lack of money that brings out the problems and the worst in people.

I saw that in my marriage. The lack of extra money magnified our problems. My wife was never happy with the amount of money I made.

She constantly demanded that I ask for a raise, questioned everything I did and blamed me for things beyond my control.

She also didn’t do anything to bring in any money.

I guess we stayed together as long as we did because I did make a decent living. I was able to spend quite a bit of money. I stayed busy trying to make money instead of dealing with the issues we had.

I was too busy at work to leave her. Having more money will make your life much easier. The trick to more money is to not commit to more spending. Making more money only works if your obligations don’t take it all.

Lots of life money here

If that is the case then you don’t really have extra money you just make more than the next guy but you are not really better off.

What I’m talking about is having excess cash that isn’t spoken for. It just sits in your wallet or your bank account waiting. You have no need for it to live or pay the bills. It is the extra Life Money that makes your life smooth.

This is the type of money that makes for a great life, for the fun, for the having it for emergencies. To let set in savings accounts to grow into more money.

This is the important money. This is what I call Life Money. All the money you make and spend to live and pay the bills is just survival money.

Everyone has survival money, otherwise they wouldn’t be surviving. Some people have a lot of bills; hence, they need a lot of survival money.  The key to a good life is have plenty of Life Money.

Some people cut their survival money as low as possible. Some people try to make more money to have more Life Money. It's best to work on both to speed up the process.

I can’t think of any example or circumstance where an individual having excess money is a bad thing. 

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