Money is an Idea or Symbol
In my weekly newsletter, I’ve written that making money is relatively easy and yet most folks
never achieve financial independence. In fact, most people retire poor! I consider that a
modern tragedy, and one of my goals is to change that! You can retire with “enough” – you
can earn more, and more importantly, you can keep more! Let’s talk about how.
Accumulating wealth is the predictable result of knowledge, effective strategies, patience and
persistence. If other people have done it, you can, too! Let’s figure out how.
The essential first step is to respect money and understand how it works. Most people never
study money. Some of us even avoid the subject. We don’t talk about it in our families. We
don’t read about it, we don’t budget or track it. And, we certainly don’t teach our children
about it in school, which I think is a terrible mistake. No wonder that as adults, the one thing
we do know about money is that we don’t have enough of it! It’s time to change that!
The second step to creating wealth is to understand this: Money is fundamentally an idea!
It’s a social agreement to exchange value in a convenient way. Little pieces of paper with
pictures and numbers have no inherent value. After World War I, particularly in Germany,
cash literally became worthless. There are famous stories of a woman with a wheelbarrow
full of cash going to buy bread. Some thieves accosted her, wrestled the wheelbarrow from
her, turned it over to dump the money on the ground and ran off with the wheelbarrow.
People had lost faith in their money, and it no longer had any value.
The key to making money is understanding that those numbers and pieces of paper represent
human effort and wealth. We can exchange pieces of paper for goods and services only if we
agree that those pieces of paper represent value!
Money is a social contract, an agreement about value. And so, the price of any object is only
what two people – a willing buyer and a willing seller – decide it’s worth. I might decide that
a particular piece of paper is worth almost nothing to me, because it has value only as a
bookmark or note paper. But to the seller, it may be a valuable stock certificate, or a priceless
painting. The value? It’s entirely and literally, in the eye of the beholder.
To make and keep money, it is absolutely essential that you “get” this! Your home, your job,
your car, the price of a meal in a restaurant or an airline ticket is only what the buyer and
seller decide it is!
Take a moment to ponder that. In Germany, that woman’s wheelbarrow was of far more
“value” than the millions of dollars of printed money it contained. The money was worthless.