During a recent discussion with a group of struggling entrepreneurs, the question “What is money?” came up. It was asked by a gentleman who was on the verge of quitting on his entrepreneurial ambitions. “All of this stress isn’t worth any amount of money,” he commented, then none too calmly asked, “What the hell is money anyhow?”

The interesting point of note was that no one at the conference table could provide more than a basic definition in trying to answer the question: what is money?

This particular group of business men and women was comprised of every day folks who are trying to do their own thing. No one was a student of economics per se; just a bunch of folks who didn’t want to keep working for someone else’s benefit and so started their own home-based business.

Everyone knows that money is what we use to trade goods and services. Someone has something you want, you give them money to get it. Once upon a time you might have given them something else you owned that they wanted badly enough to trade your item for their item; but these days money is the currency used in trading worldwide.

The word currency and the word money are not interchangeable. Money is an example of currency; but money isn’t the only type of currency, so you’re not necessarily only talking about money when you talk about currency. Currency is anything that is circulated as a medium of exchange, and money is circulated as a medium of exchange, therefore money can be categorized as currency the same way an apple can be categorized as a fruit.

The value of money is in the value of the goods that money is used to obtain. In her book “The Fountainhead” Ayn Rand’s character Francisco D’Anconia comments to a group of people who are arguing that money is the root of all evil, that money is a tool of exchange that can’t exist unless there are goods produced and men able to produce them.

Money is just the thing you give to get the thing you want. If you want nothing then having no money won’t affect you except insofar as you need money to eat and you need money for shelter and clothing and other necessities. If you’re creative enough to manage to obtain food and shelter and any other necessity without needing money, then you can survive and be quite content without money.

No one needs money to be happy. Life is not more meaningful the more money you have. If that was the case there would never be a instance of a rich person committing suicide; but rich people kill themselves often enough to prove that having money doesn’t give life more meaning. Life might be more bountiful when you have money, but inanimate objects cannot evoke joy except where an individual has lost touch with reality. Money can enhance life, make your living circumstances more comfortable, where lack of it can make your living circumstances less comfortable; and in that way seeking to have more money makes sense if you seek to have a comfortable life and you define comfort in terms of expensive “things”.

But the value of money is in the “things” it affords, and the value of things often doesn’t amount to more than the money spent to obtain them. Indeed not all of the things having money affords are frivolous and materialistic. You can’t see a doctor without money for example. There are times when having money or not having money makes the difference between life and death; so money is without question important.

But the true value of money isn’t in the money itself. As D’Anconia puts it in “The Fountainhead”:

“…money is only a tool. It will take you wherever you wish but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires.”