About 75 percent of Americans believe that money is freedom. Money is the medium of exchange used to measure value in financial transactions. It would be difficult to set specific personal financial goals and to measure progress toward achieving them without the standard unit of exchange provided by the dollar. Money, as we know it today, is the key consideration in establishing financial goals. Yet it’s not money, as such, that most people want. Rather, we want the utility , which is the amount of sat- isfaction received from buying quantities of goods and services of a given quality that money makes possible. People may choose one item over another because of a special feature that provides additional utility. For example, many people will pay more for a car with satellite radio than one with only an audio player. The added utility may result from the actual usefulness of the special feature or from the status it’s ex- pected to provide, or both. Regardless, people receive varying levels of satisfaction from similar items, and their satisfaction isn’t necessarily directly related to the cost of the items. We therefore need to consider utility along with cost when evaluating alternative qualities of life, spending patterns, and forms of wealth accumulation. The Psychology of Money Money and its utility are not only economic concepts; they’re also closely linked to the psychological concepts of values, emotion, and personality. Your personal value sys- tem—the important ideals and beliefs that guide your life—will also shape your attitude toward money and wealth accumulation. If you place a high value on family life, you may choose a career that offers regular hours and less stress or choose an employer who offers flextime rather than a higher-paying position that requires travel and lots of over- time. You may have plenty of money but choose to live frugally and do things yourself rather than hire someone to do them for you. Or you may spend a high proportion of your current income on acquiring luxuries. Financial goals and decisions should be con- sistent with your personal values. You can formulate financial plans that provide the greatest personal satisfaction and quality of life by identifying your values. Money is an important motivator of personal behavior because it has a strong effect on self-image. Each person’s unique personality and emotional makeup deter- mine the importance and role of money in his or her life. Depending on timing and circumstances, emotional responses to money may be positive (love, happiness, secu- rity) or negative (fear, greed, insecurity). For example, some people feel satisfaction in their work when they receive a paycheck. Others feel relief in knowing that they can pay past-due bills. You should become aware of your own attitudes toward money because they are the basis of your money personality and money management style. Some questions to ask yourself include: How important is money to me? Why? What types of spending give me satisfaction? Am I a risk taker? Do I need large finan- cial reserves to feel secure? Knowing the answers to these questions is a prerequisite for developing realistic and effective financial goals and plans. For example, if you prefer immediate satisfaction, then you will find it more difficult to achieve long-term net worth or savings goals than if you are highly disciplined and primarily concerned with achieving a comfortable retirement at an early age. Trade-offs between current and future benefits are strongly affected by values, emotions, and personality. Effec- tive financial plans are both economically and psychologically sound. They must not only consider your wants, needs, and financial resources, but must also realistically reflect your personality and emotional reactions to money.