In order to effectively win at building wealth throughout your lifetime, you must know how money works; the way money works are the rules of this game. Like all games you must know the rules and understand them in order to win. With money we can build wealth. With money we can purchase whatever we need and want. With money we can use it to determine the value of an asset or liability. With money we can acquire and store value. Without the use of money the global human population would probably number fewer than 500 million and we would all be hunter gathers, living off the land.
The competition isn’t your family, friends, business competitors, or society. The competition is yourself, previous versions of yourself. This game can help you feel more life contentment in your future if your competition is a previous version of yourself that may or may not have been lost in life. It is about setting new and greater personal records tomorrow and in the future versus what has been established in your past. What is seen in the rearview mirror of your life becomes smaller as you explore your future.
There are three roles of money in society;
- Medium of exchange. Money is used to get the things you need and want in life. You need groceries, you exchange your money in for the grocers from a grocery store. You need transportation, you exchange your money in for a car or bus/plane/train ticket.
- Accounting of value. It is impossible to say a $1,000,000 home is valued at $1,000,000 if money doesn’t exist, if there is no way at accounting of value. Different bills or units exist to help facilitate the accounting. You could use a million $1 dollar bills to purchase the million dollar house, or you can write a check for a $1,000,000, either way it is the same thing with the same amount of money.
- And to store value. We all have an income based on what we do with our time. When your income officially lands in your hands and you can deposit it in your checking account, how do you want to store your value? Pay yourself, then pay your bills, then do what with the extra money you have left over? Finding a place to store your money that appreciates and is stable is key.
The point of this game is to keep the role of money in your mind every time you are about to make a financial transaction. Understand the roles of money and pay attention to its interaction in society and compete against your previous selves.
Become The Wealthy You.