Understanding Money

What do you know about money?

Money answers all things. Some know it as the root of all evil while others know it as other things e.g. insurance, guarantee, defense, etc. It is important to note that money doesn't solve all problems even though it always answers. Tricky, right?

How does money work?

Interestingly, money follows a pattern, "push value, get reward", "get value, push reward". In essence, every time you give value, you would receive a reward and every time you receive value, you would give reward. Failure to follow this principle can lead to very serious circumstances over time.

How is money measured?

Money is measured in the amount of time and not in quantity. Any amount of money you have would always change value. Money displayed in a bank account balance is capped at a value to the banker.

If you have $1,000 in the bank, you might truly have $975 after bank charges if you have subscribed to banking services. For example, Silicon Valley Bank in the US charges about $25 per month on your balance.

Alternatively, if you have $1,000 in the bank, you might truly have $1,020 if you saved that money at Evolve Bank and Trust (Mercury) in the US for one year at 2% interest. At the end of every month of the year, the money increased.

How valuable is an amount of money?

Fiat which is commonly termed the physical representation of money can look solid, especially when in cash forms. However, as you get by every day, you incur a cost that may reduce fiat value directly from you or someone else.

If you check your bank account balance, you might be tempted to assume that it is your true value. If you've got just $1.60 in the bank, it can be depressing when you don't find cash sources anywhere else. Have you calculated the value of your work? Did you push value lately? Go get some money for it.

While some values are easy to push, some kinds of money can be hard to get. For instance, sending a proposal is valuable but it may not often bring money. While you have pushed value, you might need to push some more to get the money you seek.

How do you use money?

In Africa, we are trained to spend within our means and decide when to save money. However, this no longer works. Many Fintechs are learning better ways to get people to save. What the experts do every day is to watch how people spend.

Hence, the advent of quick loans and huge interests in alternation to small savings and huge returns have recently been trending. Drops of water can fill an ocean. Right? Well, an ocean wave can cause a tsunami.

Use more money to get more rewards. Here is a secret. Banking plenty of money for many people is riskier than banking the same for a few. Let this guide your choice for savings and investments.

The UP and DOWN scale of money

By the first principles of thinking, I have designed for myself how I understand money. It's the UP and DOWN scale.

Most people think UP-to-DOWN when they have money available to find reasons to spend it while they think DOWN-to-UP when they lack money to find reasons to go and get it. This is wrong. This makes a slave.

For example, if you don't have money available, don't go and search for money just to increase your account balance. When you do, you would spend it all and end up where you started oYou would keep working for money all of your life by doing this.

Think DOWN-to-UP when you have money available to focus on the low-cost items first and give room for huge savings and then think UP-to-DOWN when you lack money to focus on the target so you can be goal-driven. This is a smart way to make money work.

When you don't have money available, set goals on how to create value. Money comes when you create value. To keep it, keep creating value. Use more money to create more value over time. Solve problems. Remember, money cannot do this very well but you can. For this reason, you would get more money in return for the problems you can solve.

Focus on how you can keep the "push value, get reward", "get value, push reward" principle in check.

Using the right scale, you would find yourself spending in ways you never imagined and this might hurt but over time you would find yourself saving money you never knew you could keep.

The best-known habits from understanding money:

People who understand money have learned that the best habit is developed when you spend to save and you earn for goals. Don't just spend money, do this to keep more. Don't just search for money, search with a goal as your objective. A goal should be SMART (Simple, Measurable, Achievable, Realistic and Time-bound).

Choosing the master and slave, is it going to be you or the money?

I hope we all understand money, how it works, how to possess it and how to make it a slave. Money should work for us, being our slave and not vice versa.

by: Emuobosa Onerhime