Thinking about money.
A long long time ago in a galaxy far far away….
Ok, not that long ago, but still. When I was a teenager I went through, (perhaps like most teenagers?) a philosophy phase. I looked into different religions and as you might guess got pretty into buddhism.
I started meditating and even got to a point where I managed to empty my mind of all (conscious) thought.
But aside from philosophising over spiritual matters I was also thinking quite a lot about worldly matters. Like, what if the medicine industry was actually not in favour of curing all diseases?
I thought, if they managed to cure all diseases then there would be no way for them to make money from them, perhaps this is why they only ever seem to treat symptoms instead of causes.
I had a similar thought about police. If all crime were to disappear then what need would we have for police?
Then, I thought about money itself.
Why do we have money?
Why do we have money?
The rich always get richer and the poor always get poorer. It’s not fair or just. So, what if we didn’t have money? What if everything we needed was just produced and given freely to whoever needed it?
Homes were built for people who needed homes, food was produced for everyone because who doesn’t need to eat? And no one would have to worry about how they would keep a roof over their head or bread on their table because everyone would have what they need.
Utopia? Perhaps.
Today just now I found myself thinking about this again decades later and I realised why it would most likely be the absolute opposite of a utopia and probably more like hell on earth.
The problem of entitlement.
There’s a very powerful quote from Jerzy Gregorek that sums up this problem in a nutshell: “Hard choices, easy life. Easy choices, hard life”.
If everything was free. Everyone would demand and feel entitled to everything that was available. In the chaos of trying to fulfil everyone’s demands there would be shortages and some people would end up with more than others.
Then, the people who have less would get enraged and maybe start steeling from or attacking the people who have more. Wars might even break out over resources.
The easier we make our lives, the weaker we get and the more entitled we feel. Weak people are dangerous and volatile, not in control of their emotions and eventually not in control of their actions.
If suppliers were not able to keep up with demands it could lead to absolute chaos.
All else being equal in human nature, a world without money would be hell for most.
Why do the rich get richer?
It’s a very common belief that the rich get richer and the poor get poorer because the systems of the world are rigged to favour the rich. It is. But! That doesn’t mean that it’s impossible for people to make essentially as much as they’d like.
You can be as rich as you’d like in this world, so long as you provide enough value.
If you complain about the rich getting richer but you work a 9-5 or retail job and make absolutely no effort to contribute to the economy by creating value outside of that then you’re not going to make any money outside of what you get paid from your day job.
And, if like me you’re rubbish with money and saving and you spend impulsively (in my case mostly on junk food) then your bank account is only ever going to string or at best stay the same size.
You (and I) get poorer not because the game is rigged, but in spite of it. Rich people spend most of their money on things that make them more money. Poor people like us, spend most of our money on things that we consume. Junk food, Netflix, video games, things that would, if we even sold them, almost exclusively make us less money than they cost us.
Save, save save, and then invest.
If you haven’t been born into wealth or inherited it then there’s only one option at the start of the journey to wealth. Save.
This is the opposite of what most influencers and ‘financial gurus’ will tell you. They will tell you you need to invest in assets that make you more money. They will get you all hyped up and make you feel like if you only knew what they knew you could be making 10, 20 or 100 times more than what you are now.
That’s how they trick you into giving them your money.
Part of what they say is true. If you only ever save money and never invest it in assets (things that make you more money) then because of inflation your money will lose value or be worth less over time. However, what most of them don’t tell you is that in order to begin investing in assets or start your own business you need to have large sums of money to begin with.
If you’re not born into money and don’t have rich family members then there are only a few way’s you can raise that kind of money. Getting a loan is one option but then given that 70% of UK businesses fail in the first three years you’d be taking a big risk of getting into a large amount of debt.
Another option is to save each month which if like me you don’t have a family to take care of can actually be done quite easily provided you have the required discipline which I am currently in the process of cultivating.
But if you do have a family to look after especially young kids then I’m guessing that about 5000% of your income gets used up on them and all the inevitable chaos that comes with running a household.
So then what do you do?
And that’s the problem that most of us struggle with. One solution I can think of is getting together with people you trust and contributing to a shared pool of money that you use to start a business.
Personally I’m going with the savings approach for now because it gives me the greatest control over how my money is spent and what direction I take my investments in the future.
This is the slower road as taking out a loan would be much quicker but especially with my lack of self control with regards to spending right now it would be a recipe for disaster.
Before anything else I need to learn the foundations. Financial discipline and self control. Otherwise it won’t matter how much money I have, I’ll always be wasting.
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