A lot of confusion, and misdirection, is caused by the fact that we often mix the two ideas of cash and wealth.
(No, I’m not referring to a wealth of “Love”, “Health” or “Family”.
Those are all important things, but they rarely get confused with a healthy bank balance.)
Often we may think that, in order to be wealthy, we need to have as much cash as possible.
However, since there is a limited amount of cash in any economy, that would mean we have to get as much of that cash from other people as we can. Then hold on to it tightly, once we get it, so that no one can take it from us.
If that is the case, then everyone around us becomes our competitor, or perhaps even a threat to our own wealth.
Also, for reasons we may go into in a future post, that plan almost always backfires in the long term.
So, let’s consider a simple story:
There is a small town somewhere. This town has a lot of people. But we are interested in two in particular. A tailor and a shoemaker. Both of whom run profitable businesses.
One day, the shoemaker walks past the tailors shop and sees a nice blouse she likes. She asks the tailor the price, the tailor says “1000 naira”. The shoemaker takes a 1000 naira note out of her wallet to pay and then hesitates.
“I hope you don’t mind” she tells the tailor, “My daughter was playing with my wallet earlier. She wrote the word ‘CASH’ all over the money there in bright marker. The note is bit messy but is still good.”
“No problem at all” the tailor says smiling. “Enjoy your blouse.”
A couple of days later the tailor walks into a nearby shoe shop and sees the shoemaker behind the counter. “Oh hello. Is this your shop?” he asks. “Yes, it is.” She says. “It looks like we may become regular customers.”
They both smile and he begins to take a look around.
“This shoe looks nice, how much is it?” He asks
“Most of my shoes are 1000 naira.” She replies.
“Great.”
He rummages around in his pocket, pulls out some money and laughs. “I can give you 1000 naira CASH.” He says, giving her the same 1000 naira note she gave him a few days ago.
She laughs too. Then takes the money and gives him the shoes.
The first few times are a bit of coincidence, but eventually it becomes a tradition.
Whenever, they buy anything from each other, they always use that same 1000 naira note. That same note keeps going back and forth between them.
As a result, the total amount of cash they spend never increases. However, by the end of the year, the shoemaker has ten new shirts and the tailor has ten new shoes.
All for that single 1000 naira note.
Contained in that story is one of the keys of wealth creation.
Wealth creation is not the creation of currency, it is the creation of value.
It is the shoes and shirts they receive, not the 1000 naira note going back and forth, that matters.
If we have a beautiful, comfortable house to live in,
A wide choice of lovely clothes to wear,
Plenty of delicious & nutritious food to eat,
Access to fast and comfortable forms of transport to get wherever we want to go,
Good Medical treatment, education, and resources to deal with and recover from any arising emergencies,
All with no debt hanging over our head to worry about,
Then we are very wealthy.
Even if our bank account is empty.
( I just realized when writing this that many three year olds are extremely wealthy. 😀
Sadly as they grow, their wealth does not grow to match their expanding world.)
Money is simply a messenger. Aiming to have a lot of money in our account, is like aiming to have a lot of messengers waiting outside our door.
They are not useful to anyone, unless we have a lot of messages we want delivered.
Does this mean we shouldn’t aim to have money?
It means the opposite actually.
It means we should aim further. Money on its own does not provide value.
And it is that value that we really want and need to aim towards.
The value we want to create
The value we want to experience
The value we want to add
The value we want to surround ourselves with.
We must aim towards the ways we want to change our world for the better.
For Further Study
The Richest Man in Babylon by George S. Clason – A very useful book of short stories containing many lessons about money and wealth.