Money Matters
Yes. Money matters and matters a lot. But money is not the only thing that matters. Let us have a look at matters around money and how it matters.
Table Of Content
- Money Matters
- Why Money matters so much
- Your relationship around money
- Myths about money
- What exactly is Money
- Money is a medium of exchange
- Money is a replacement of ancient system of barter
- Necessity of Money
- Money is a carrier of energy
- Common fears around money
- Fear of not having enough
- Fear of lack of capability to earn enough
- The Universe is full of abundance for all
- The Roadmap to Prosperity
- Set your financial goals
- Prepare a Financial Plan
- Upgrade & upskill yourself
- Draw a Budget
- You are richer than you think you are
- The Growth cycle of Money
- Be sufficiently Insured
- Roadblocks in the path of prosperity
- Say No to impulsive purchases
- Don’t Show off
- Avoid Debt
- Conclusion
Why Money matters so much
Money matters so much to us because of our perception about money. Let us try to unravel our relationship around money
Your relationship around money
How do you perceive money ?
Do you think money is the ultimate measure of success in life ?
Do you believe that money can bring you all the happiness in life you want ?
Do you think you need money to make money ?
Do you believe that you must have a high formal educational degree to make money ?
Different people will have different answers to above questions. It all depends on your perspective about money.
And your perspective about money influences how you go about earning and handling money
Myths about money
Here are a few common myths about money.
Myth 1 : Money is the measure of success : How do you measure the success of a Doctor ? By the no. of patients he has cured or by the amount of money he has made. Or how do you measure the success of a business ? By the no. of satisfied customers it has or by the amount of money it has in its bank accounts.
Success should not be measured in terms of money. Success is measured in terms of value you can provide to your Customers, Clients, Employer in exchange for money. The more satisfied customers you have, the more successful you are.
Money is not the measure of success. Money is a by product of success.
Myth 2 : Money brings Happiness : Look around you. Are all the wealthy people happy ? Or are all the happy people wealthy ?
You will find many examples of people with fat bank balances living ( and dying) lonely or living with pets in the name of family or committing suicide or absconding , living life of a fugitive. Are they happy ?
You will also find many examples of people who have low bank balances but high level of happiness. They eat well, sleep well , laugh heartily and enjoy little things of life with family and friends.
Happiness is not directly proportional to money. More money does not guarantee more happiness. Money buys you comforts not happiness. Happiness is in experiences not in possessions.
Myth 3 : It takes money to make money : There are a no. of billionaires who came from very humble family background. They started from zero and went on to build a net worth of billions. Look around you. You will find many examples of people beginning without money and going on to make good money.
More than money, you need a mindset to make money.
Yes, money is required to make money. But if you have the right mindset, you will be able to arrange required money.
Myth 4 : Formal Education is must for Money :
You don’t necessarily need a degree in finance to make money. The world is full of billionaires & millionaires who have no high profile educational degrees attached to their name. In fact, Quite a few of them have not even completed School or college education.
This is not to undermine the importance of formal education. Knowledge has great value. But a degree in itself can’t get you money.
You need Financial literacy to make money.
Myth 5 : Being Wealthy is same as being Rich :
Being wealthy is different from being Rich. Wealth is about Assets. Richness is about Income. Some one who owns a Mercedez bought with with bank loan is not wealthy. He may be rich because he is earning enough to pay EMIs. Earning high income does not necessarily make you wealthy. If you spend all your income in financing expenses, you can never be wealthy. To be wealthy, you must build assets which appreciate in value over time.
Aim to be wealthy.
What exactly is Money
What makes money so important ? Why it is that money occupies so much space in our minds. What exactly is money ?
Money is a medium of exchange
Money is a medium for exchange of Goods & Services. A unit of measurement for giving and receiving. No more , No less.
Money is a replacement of ancient system of barter
In ancient system of barter , people exchanged their things and services for things and services from others. For instance, farmer would exchange wheat for cloth from a weaver. Or a teacher would teach children of a vegetable vendor in return of vegetables. But Barter system had certain disadvantages :
1) Lack of common measure of value
2) Inconvenience in finding simultaneous coincidence of wants
To overcome these advantages, Money was introduced as universal unit of exchange and common measure of value.
Necessity of Money
It flows from above that money is needed to buy necessities and luxuries of life. Money is required to live a comfortable life. The more money you can spend, the more comforts of life you can buy.
Money is a carrier of energy
The act of giving and receiving money should be an energetic exchange between Giver and Receiver. The receiver of money should feel excited to receive money and The giver of money should feel excited to receive desired goods and services of matching value in exchange for money. This is possible only when the pricing is optimum – No over charging , no under charging. In an ideal scenario, both, the giver and receiver of money, should feel excited and energetic
Well earned money carries positive energy . Ill earned money carries negative energy.
Common fears around money
Since money is so important to almost all of us, it is only natural that it has certain fears associated with it.According to finacial experts and psychologists, some common fears associated with money are :
Fear of not having enough
The fear of not having enough money to be able to continue to live a life of desired standard in future is very common. Future is uncertain and occasionally, we do feel anxious about a downtrend in business or losing job etc etc
Fear of lack of capability to earn enough
We often begin to doubt our capabilities to make money particularly in times of financial hardships. This fear leaves us looking down on ourselves
Most of us have felt these fears at some time or other. However, we must not allow ourselves to be taken over by these fears . These fears negatively effect our financial capabilities.
The Universe is full of abundance for all
The Universe has abundance. It is full of Wealth, Joy, Happiness , monetary means and Growth opportunities for all.The Universe gives every one right to be Rich , Wealthy , Happy & Healthy. And The Universe is willing to give…to all.
But we must know how to take from Universe. We must develop the right mindset to take from Universe what we desire,
Think Abundance, Not Scarcity. Be Grateful, not complaining. Embrace Hope & Positivity, Remove Negativity.
This mindset will put us in alignment with The universe and we will be able to receive from the universe what we truly desire
The Roadmap to Prosperity
Having understood Money and Money mindset, let us now draw our roadmap to propsperity
Set your financial goals
Set your financial goals ( such as Owning a car or House , Childrens’ Education & Wedding , ,Going on vacations, Investing in a business etc etc). Be very specific about amount of money required & time period. Categorise goals into Short term ( 1-2 years) , Mid term (2-5 Years) & long term ( 5 years and above)
Prepare a Financial Plan
Now, draw a plan to earn / acquire the targeted amount of money. We know that money is a medium of exchange. So, you must have something of equivalent value to give in exchange of the desired amount of money. Put an honest value to your goods / services. Do they measure up to your desired amount of money over the targeted period ? If yes, start monetising. If not, Think of ways to enhance value of your goods & services.
Upgrade & upskill yourself
Sharpen your skills. Keep yourself up to date with latest trends in your field. Continuously upgrade & upskill yourself. Acquire new skills. Invest in Learning & acquiring knowledge. Raise the value of your goods & services up to the equivalent amount of money.
Draw a Budget
Prepare a monthly budget of your current income & expenses. Categorise expenses into Discretionary & Non Discretionary. Monthly rent, Groceries, School fee are examples of non discretionary expenses. Visits to Pubs, Gym membership , coffee at Barista are examples of discretionary expenses. Plan your expenses so that these are within your Income.
You are richer than you think you are
In their book , “The Latte factor”, the authors, David Bach & John David Mann have very well pointed out that you are richer than you think you are.
Take a look at your monthly expenses. Which ones are indispensable & which ones are dispensable. Daily coffee at barista or frequent visits to pub or frequent rides in cab or a fascination for all things branded …are few examples of dispensable expenses. You can easily cut down on these expenses without sacrificing much. For instance, you can make coffee at home instead of going to barista every time or take public transport instead of cab or buying generic goods instead of branded ones. See, how much you can save.
The Growth cycle of Money
Earn > Save > Invest > Earn > Reinvest
Ride the growth cycle of money for faster accumulation of riches. Save a part of your income and invest it wisely. A wise investment will earn you a steady income. Let your money earn for you. Re invest that income to earn more. Reap the benefits of Compounding.
Saving also acts as a cushion for unforeseen & unavoidable sudden expenses.
Be sufficiently Insured
Keep yourself & family covered with appropriate Life & Health Insurance. An appropriate Life Term plan is best one which gives a good coverage for a low premium. A family health Insurance plan takes care of medical bills in emergency
Roadblocks in the path of prosperity
There are certain roadblocks in the path of prosperity. It would be wise to avoid these.
Say No to impulsive purchases
In the digital age, purchase has become a one click affair. On every web page you surf, there are a no. of advertisers enticing you to buy. And more often than not, you end up buying something that you don’t really need. Always differentiate between Needs & Wants.Don’t splurge money on fancy wants. Buy only what you need.
” If you buy things that you don’t need, you may have to sell things that you need” – Warren Buffet
Don’t Show off
Don’t buy things you dont need, with money you dont have, to impress people who dont bother about you. The fact is that no one really gets impressed by your show of affluence. Driving around in a mercedez or wearing a diamond studded watch in itself does not impress people. More often than not, It evokes a feeling of jealousy or competition or desire in others.
People are impressed by your Growth story & Success story not by your show of pseudo affluence.
Do you know, Faux Affluence is the tendency to spend more than we earn to impress people who earn more than us.
Avoid Debt
Don’t borrow to finance expenses or assets that depreciate in value over time. When you borrow, you spend money even before earning it. Borrowing depletes cash surplus . Interest silently eats away into income. Debt considerably reduces our ability to save & invest for future income.
Do you know, total household debt ( Personal & Credit card loans) in India is about 42% of GDP . And more than 50% of this debt is towards consumption ( Non Housing retail loans).
It is an indicator of alarmingly rising trend of spending more than income.
Conclusion
We need to understand money in right perspective. Let us bust myths & remove fears around money. Adopt the right mindset and set on path of earning towards our financial goals. Keep doing your best & enjoy the journey.
Money is just a means to live a life of comfort & desired level. Nothing more than that. Money can buy you House, but not Home ; Bed but not sleep ; Food but not appetite ; Comforts but not happiness.
Money is not the measure of Success. Oprah winfrey defines success not just by wealth but by living a life of purpose,happiness & service to others.
The objective should be to live a reasonably comfortable life of Fulfilment , Growth & Happiness.
