We talk about money a lot on this channel. I try to give you practical tips on how to use money better. But this week I wanted to take a step back and ask a bigger question. What is money? I think a lot of people spend too much time dealing with money, and never stop to ponder what money really means. WATCH NOW
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VIDEO SUMMARY
Money is something everyone wants. Even people who claim to not care about money, that is not really true. People want food to eat. They want clothes to wear. And that costs money. The general consensus is that more money is better than less money. But what is this thing we call money? And why is it so important in our lives?
The reason why I am talking about this, is because when you understand what money is, it will actually help you make better decisions in life.
If you think about our society, it is actually quite interesting. Because essentially all humans are born the same. We all come from dust. We all return to dust. We are all just people. We all come into this world with no money. Then over the course of our lives, some people accumulate lots of money and some people accumulate very little money. What makes the difference between someone who is rich and someone who is poor? The obvious difference is the rich person has a lot of money, but why? Is the rich person somehow better than the poor person? No, because they were born the same. So what is the difference.
Of course, many of you will correctly point out that some people are born into money. If you are lucky enough to be born in certain countries, you automatically have more money than poorer countries. You might point out that life is unfair, and certain people have advantages and disadvantages. All of that is true, but let us set that aside for a moment. Remember that the point of having this philosophical conversation about money is to help you in whatever situation you are in. Because if you take two people in the same situation, one is going to gain more money and one will gain less. And in the study of economics we have learned that there are reasons behind why some people are more successful than others. So yes, life is unfair, but that does not mean you should ignore the truths about money that can help you become more successful.
Economics tells us that money communicates the value of things. The price of something is the intersection between supply and demand. If someone wants something it will be more valuable and the person selling it will be able to make more money. People’s bank accounts are the result of this endless conversation back and forth of how much things are worth.
What this tells us is that money comes from your choices. If you want a lot of money in your life, you need to make life choices that create value for other people. I am talking about choosing things that are really difficult: Working hard, having self control and not spending money on frivolous things, choosing to work on your homework instead of hanging out with friends. When you compare someone who make these difficult choices with someone who is lazy, throws their money around, and gets caught up in drugs, it becomes clear why some people are more successful than others. It is the life choices that is driving people’s success.
For example, take being a Doctor. Now I have met a number of doctors who were pretty clueless when it comes to money. But in general, Doctor’s tend to do well financially. Why is that? It is hard to become a doctor. Medical school is hard. You have doctors spending years in college for the chance to get a job. They have to work really long hours. And doctors are in really high demand, because everyone gets sick. No one wants to die, and so you are willing to pay this person whatever it takes. This example shows the reason why the doctor is wealthy is because the difficult decisions they made in life.
So what should you do? How do you make money? Not everyone should be doctors. That is not the point. The point of talking about money is to help you in real practical every day decisions for your unique situation. You are going to have unique talents and opportunities that other people do not have. Money is communicating information to you about your situation on how you can create value. Usually that value comes from difficult decisions that require sacrifice. You have the choice. Do you work hard and pursue the opportunities around you, or do you waste your time away watching television? You need to look at your life and figure out if there is any way you can contribute to making other people’s lives better. Because there are two groups of people in this world. Are you the type of person who is wasteful and costing money, or are you creating value and contributing to society? What you will find to be true, and what economics teaches us, is that money flows to areas of high productivity.
This is the general answer to the question “What is money.” Money flows to areas of high productivity. Money is just a representation of where value is being created. So if you want to be successful, you need to make choices to become an area of high productivity. However, I would add three caveats to this idea:
- Money requires other people. If you were alone on a desert island, you would not need any money. Money is only important if there is another person to make a transaction with. This is important to realize. Money is not something you have, it is the value that other people give you. If other people do not find you valuable, you are not going to have any money.
- Money requires a little bit of luck. There are no guarantees in business. Sometimes you can work as hard as possible and just get unlucky.
- Money is not everything. Money is not even the most important part of life. This is something I talk about a lot on this channel. If money is the only thing you care about, you will probably end up miserable. But money is definitely something you want to figure out during your lifetime, because it enables you to get to the more important things.
I hope you found this video helpful. I do not think enough people make the mental connection on how their choices in life impact how much money is in their bank account. And you can increase the amount of money in your bank account, by making smarter choices. You have so much control if you just take responsibility. What people do instead, is sit around wishing for money. They wish they could win the lottery and someone would just give them the money. What they are wishing for is to get the money without the responsibility that comes with it. Well guess what? Life does not work that way. We have all heard “money does not grow on trees.” But what you can do is plant a bunch of seeds, grow your own orchard, harvest the trees, sell the fruit, and make a ton of money.
And just to be clear, I am not suggesting you need to live a horrible life of sacrifice. The sacrifices and hardwork are not such a big deal if you are following your dreams. If you know where you are going, and it is towards your dream life, who cares about a few sacrifices. My hope for today is that you make the mental connection between your decisions today, your dreams, and your future success in life.
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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.