How do you see money? What were you taught, what have you learned, and where did they learn it from? Knowing what your viewpoint about money is on a conscious level can help tremendously to get more out of life so let me share some thoughts regarding money.
I’ve heard it said that we would all be better off if money didn’t exist. I’ve heard people say they hate money, I’ve heard it said that we need money. Many of us hear that money is evil leaving out the entire part that it’s the love of money that’s evil.
What is money
If you shorten the definition of money to its core money is simply: a medium of exchange. I bring this up because there are those that say we would be better off if we went back to a bartering system, yet they still have money. The definition of barter is exchanging one good for another. This essentially means that all goods and services that we as people provide to the public are in essence money.
How often do you help a friend fix something in exchange for dinner or a drink? Do you ever watch kids in exchange for.. input your reward? What this means then is that you as the person, your talents and abilities are the true assets, the money, and we all then exchange them for something we want more.
Sometimes you want cash which is properly called a currency, and currency is simply a generally accepted system of money to speed exchange. Sometimes you want the comradery of friends or family. Or you don’t want anything in return and you accept dinner out of respect for the other person so they feel good about the exchange.
How does currency speed exchange?
By using currency as a medium of exchange it’s much simpler to determine how much cash is required instead of trying to accept cows, chickens, beans, much fewer pieces of them, or other items.
Currency helps remove the need to negotiate what you can get or pay for goods. Instead, you get to choose where you will sell or buy from. This allows you to focus on what you do more instead of taking hours, days or weeks negotiating the best deal for what you have to offer.
Have you wondered what other income types there are? This article talks about the 3 income types.
Most common money viewpoints
Saver
This viewpoint focuses on paying off debt, building retirement, and saving money for a rainy day. Do you or someone you know to show up at the checkout counter with a coupon or discount code, if so then this is you.
For the most part, having a part saver viewpoint is a good idea for all of us. Specifically in that putting aside money for future uncertainties, and looking for good investment opportunities or education moments can really enhance our lives.
It’s a problem when all you do is hold onto the money and never utilize it. What good is the money to your family or just yourself if you never get to enjoy the use of it? Not to say just go out and throw it around irresponsibly.
It seems that the biggest fear for most of us is the lack of money, while a big fear for those that get money is the fear of losing it. Usually, this is because from a saver point of view that’s all there is: you have money or you don’t have money.
They aren’t used to putting money to work for them to create more money. You could take some of your money and get an annuity or real estate, dividend stocks, or something else that generates monthly cash flow. If you have read Rich Dad Poor Dad, Robert Kiyosaki mentions wanting a certain car, and to get it requires him to get do some real estate deals that generate the cash flow needed to buy it.
Back to a savers viewpoint. Savers are great at reducing expenses, and figuring out how to cut this or that to reduce monthly costs. They are great at putting emotion aside and avoiding the spur-of-the-moment purchase as opposed to the spender.
Spender
Some people just love buying stuff and instead of paying things off and planning long term their focus is really just on the here and now. This isn’t to say that they have lots of income or lots of debt they simply are more focused on enjoying themselves.
This viewpoint is really common for all of us when we first get out of high school or even college because we have very few expenses. This could be your mindset after you have worked for a long time and paid off your liabilities too.
Nothing wrong with this mindset, unless you keep asking yourself where all the money went. What happens, we just had money in the account now what?
Generally speaking the biggest struggle for those in this mindset really is setting money aside for future goals. To do that it’s best to automate it. Knowing you “should” save money or want to save money and constantly finding yourself not doing so is an exercise in futility.
Set an automatic transfer, or get a whole life banking policy for where you transfer funds and don’t touch it for things other than generating more income, etc. Most do this at a job where they have a 401k and it builds itself without any thought.
Creating a system or automation is something that investors and business owners must do to grow significantly but also to help reduce their personal input requirements. Removing the need to be personally involved in every aspect every day increases efficiency and also gives other people the opportunity to do what they do well.
An example here is a real estate investor that creates a system of real estate agents that look for properties and bring them to his attention. Those agents get to do their job, while the investor gets to do what he does, making for a win-win scenario all around.
Investor/business owner
An investor is someone that takes resources they have and puts them into a project that provides a positive return. We usually consider resources to be money, however, it can be many others like credit, skills, and time.
In relation to time, most of us have experienced trading our time for money but that’s not how it is for investors. An investor gets paid based on projects being completed examples could be: a real estate deal, an application submitted for insurance agents, a video created for YouTube, or an actual movie for an actor.
The reason for doing this for most investors is to be able to use their time as they want. No matter how much money or amount of stuff you have, when the ultimate bill comes due, all of that doesn’t matter. So, we spend our time on projects that have the potential to generate cash flow so we don’t have to give time for money.
For all of us, time is the most limiting factor. There are only so many hours in the day to do what’s gotta be done. For some working full time to make ends meet and doing something on the side still limits you to at most 20 hours a day. That being said it’s unsustainable forever due to age not to mention the other little things that come up.
Once you get things figured out through practice and mastering your skill the need to put tremendous time into it is no longer necessary. This is when you get to start enjoying some of the time freedom.
Conclusion
Whether we use paper cash, cows, gold or pure personal skills money is not going away. It is a form of exchange of one type of value for another value.
A short summary of the general viewpoints are 1) you earn it you spend it, 2) work then save hoping to retire in comfort, and 3) create value for others to make money work for you.