What is Money? Your Complete Guide To Money Happiness Pt 3
- How to Save your Money: Organizing Your Debt
How To Organize Debt To Pay It Off Faster Whether it is a car loan, mortgage, credit card debt, student loans, business or personal loans, most of us have some debt we are paying off. Many people simply pay the minimum payments and think nothing...
- How to Save Money Every Month With The Credit Card F...
This is not a get rich quick, or cheating the system strategy. This is a concept for those that can consistently pay their credit card bill in full each month and take advantage of the “Float”, rewards, and other perks that come with using a...
- Your Complete Guide To Money Happiness Book Review
One of my goals is to read as many books on the subject of personal finance as I can. I then thought that everyone can benefit from the tips in these books, but may not have the time to read them, or know what to read. Yes there are a ton of book...
- Your Complete Guide To Money Happiness Book Review P...
More tidbits pulled from this great book.
This is part 3 in my book review of Your Complete Guide To Money Happiness by Henry S. Brock. Though you do not need to start from the beginning to fully understand this article, you can go to my profile for parts 1 and 2, or find them to the right of this article.
In Part two, one of the author’s suggestions was to check your ego at the door. Only by doing that can you pursue happiness and the other four most sought after commodities. One way you can do this is to reevaluate your view on what money really is.
Before money, people traded goods and services to one another. The concept is easy, instead of having to do and make everything needed to live and work, you could specialize in doing something well and trade it to others that need it and do something else well that you need. A shoemaker trades with a blacksmith, a butcher trades with a tailor. Not only are you getting everything you need in the end, but you are also creating a better product faster and more efficient, since that is what you are concentrating on doing.
But sometimes a person needed a good, such as a pair of shoes, but wasn't willing to trade a new wagon that they build for the shoes, since the value of the wagon was far more than the shoes, and maybe the shoemaker didn't need a wagon at that time.
Seeing the problem this created, money was formed as a medium of exchange, from gold and silver to dollars and Euros. This is much more convenient then bartering, as money is universally recognized. now instead of trading a whole good, it can be parted off into an acceptable currency that many honor and perceive the same value for it.
Henry Brock goes on to coin his definition of money as Stored Labor, and I completely agree with his definition. Think of the average Job. You work for an hour and trade that hour of labor for an agreed upon dollar amount. Now, you are given this amount but you do not need to spend it until you choose. I often will look at something and say, “Man, I would have to work for 5 hours to buy that”! You are trading your time and effort for money. The more you work and the less you spend, the more you have stored, or as we call it in the financial world, saved.
How does Henry’s definition help us in our quest for money happiness? It teaches respect for money. It blatantly says someone worked, put in their time and effort for this money. It cuts out the status, confidence and other false feelings society places on money and simply equates effort we expend with the value of the money we have.
Think of this. What if I told you I would give you a new car if you work for me for 8 hours a day, 5 days a week for 6 months? Sounds like a bad deal right? But why, because there is a direct trade of good for labor. People would be happy to go to a restaurant and spend over $50 for dinner, but if you had to wash dishes for 2 hours for your dinner you would probably not eat there. People are more willing to spend money than actually exchange labor.
By using this direct translation, you will begin to see small purchases as unnecessary and your respect for money will rise. Now I know some of you are thinking, “Money is not only earned, it can also be grown”. That is true, but there is a correlation between the two. The more you respect the money you work so hard to earn in your early years, the more you will have to live off of as it grows in retirement, and works for you. Something you are buying in retirement is time, time not traded for labor.
Again, I point out that Henry S. Brock has not offered financial advice, stock picks, or tax strategies. He knows that before any of those tips can be implemented you first much change and prepare yourself mentally. By changing your perspective on money, how it is earned, and what it means, you will begin to save money before you learn anything about financial equations, present and future value or taxes.
As you move forward learning how to handle your money responsibly in order to reach your goals, keep in mind the work, time, effort and sacrifce you made for your paycheck. if you believe you work hard and honestly for your money, you will begin to be less likely to give it up frivolously on things that you do not get an adequate benefit from exchanging your hard earned money for.
For more information on personal finance, visit http://www.stewardology.com/blog/