What do you really think about money? Is it something you work for? Is it inherited or is it earned? Are you desperate to have more of it? Have you been chasing it most of your life? Truth is, most of what you think about money has been influenced by your upbringing and environment. If you were born into a family that didn’t have much money growing up knowing that you too will not grow to have much money. Or perhaps you went on the complete opposite end and decided to make as much money as you can so that you will never be in that position again.
The fact that your school didn’t teach you much about this subject doesn’t help things. Because of this, most of you are going to have false beliefs about money. These beliefs aren’t going to help you on this journey. In this post, we are going to have to change the way you have been seeing money your whole life. The rich and wealthy have always been depicted as evil, backstabbing, entitled or corrupt individuals. The question you need to ask yourself is if you have bought into that stereotype. A recent report released by Wealth X showed that of the world’s ultra wealth, those that had a net worth of 30 million or more, 68% of them were self-made. And it seems like every other study backs up this conclusion.
Here is a 2-dimensional equation that you have been taught.
Money=Salary from a job
Past a certain point, the prospect of getting a job becomes the sole purpose of your education. So what is wrong with this you ask? Let us assume if you are reading this post you want to make money. A lot of it and in a short amount of time as possible. If this is your goal, then this equation for generating money will never get you there.
The Precious Resource – Time
We all have a precious resource. The most important resource of all and once it is gone there is no way of getting that resource back. That resource is time. The standard job, the amount of money you burn is dependent on the amount of time you put into that job. If you earned $20/hr and worked 40 hours a week, it would take you nearly 24 years to reach a total of $1 million. But that is without subtracting any taxes or any expenses that you will incur over the 24 years and let us not forget that inflation will make your $1 million less valuable.
The reality is that on a salary of $20 an hour you can only really be a millionaire at an old age by living frugally. By this age, the time has slipped through your fingers. You traded all that time for money and it wasn’t even a substantial amount either.
Again you ask yourself. How is it then that there are self-made millionaires and billionaires at such young ages? What makes them so different? The truth is, they have a better equation than you. They have a way of understanding money that you haven’t quite grasped yet.
The truth about money and wealth.
Stop chasing money in a capitalist society. The rules of the game are as follows:
You are paid in proportion to the perceived value that you have and the people that perceive your value.
They are the market and the consumers of the economy. The market is your friends, your family, your neighbors and your country. People complain that football players are overpaid, but for players to be paid millions, there has to be a market for the football industry in the first place. People have to see the value in football in the first place for them to want to spend money on matches and merchandise. And if the market has a high demand for football, the players who are at the top of their game get paid generously for it.
It is not about how hard you work. The cleaner that is sweating and tiring himself out every day is paid far less than the accountant sitting behind a desk. Why? Because the market perceives the value of what the cleaner does to be far less than the accountant. As harsh as it may sound, the cleaner can be replaced by anybody. It is not difficult to learn to do this job and therefore the market will not pay him more than the accountant. The guy who spent years studying numbers. The guy who has saved his clients thousands on their taxes.
But even so, we have just discussed how getting a job is in the right equation to amassing a great amount of wealth in a shorter period of time. So how can you increase the perceived value? What is it that makes individuals like Jeff Bezos that make their perceived value so high?
If you want money solve problems.
Take a second to digest this statement, you will realize that just about all money runs from this basic premise. If it solves a problem, money will be thrown at it. The solution to a million-dollar problem will make you millions. If it is a billion-dollar problem then the solution will make you billions. Think of all the problems that a site like Amazon solves. The hassle of going to a store, that hassle of having to wait weeks for delivery, cheaper prices and so on. Not to mention other companies that Amazon owns and the problems that those companies solve. Jeff Bezos helped solve a billion-dollar problem and was rewarded favourably for doing so.
If you have been chasing money, then you have been doing it wrong. It sounds almost paradoxical but if you want money it isn’t money you should be looking for. You should be looking for problems and more importantly solutions to these problems. Once you find that solution, make a business around it.
Listen to the market around you. What are people saying they don’t like? Is there anything that frustrates them? What do people think is incredibly inconvenient? Is that a problem you can solve and also is that problem worth solving?
A problem worth solving
The final step of this equation to wealth is finding a scalable solution to the problem. Your solution needs to affect a magnitude of people. Starting a restaurant that is not scalable. You are constrained to the local area but a franchise, that’s more scalable. Is your solution a piece of software? Then that means once that software has been built you can scale it infinitely online without needing to worry about things like production or shipping costs as it’s all done virtually. Good luck finding infinite scale with a job.
But be careful. Does your solution require your time to generate money? Let’s say you are a yoga teacher that charges $100 per hour. You only made yourself another job disguised as a business. There is only a certain amount of lessons that you can feasibly do in one day. And therefore your income is time-bound. But if you created an online yoga class that ran 24/7 with lessons you only had to create once, now that is scalable.
Scaling your solution is critical here. Do not get lost on this point. Automation also plays an important role. Systems and businesses will keep your business running like a smooth machine if implemented properly. If there is something in your business that you can outsource to somebody else or hire an employee to do it for you, then do it. Tsking yourself with everything is a bad thing. As much as you may think you’re the best, there’s someone out there that can do a better job than you.
Once you have found a solution, it is your job to make sure that solution can be accessed by everyone in your market. It’s not about your ego and it’s not about what you are passionate about. The market doesn’t care about your passions. Now that you have a profitable business running with the right systems and processes in place, it is time to move on and reap what you sow.
This is where all the effort that you spent on building your company comes to fruition. If you choose to continue running your business, there are a multitude of reasons for you wanting to do so. Maybe you love the company that you built and want to stick with your baby. Or maybe you think you can add more value to the company and sell it for more than it’s currently worth. Perhaps that business runs in the background so you do not have much to do to keep the wheels turning. Or maybe it is a combination of these three things. Either way, you did it! You solved a problem that the market wanted to be solved and it awarded you favourably for doing so and so now you ask what?
Your money or your life
Money is just a piece of paper. A number on a screen. Its value is only backed up by our belief in its value. From the very start, this was never about the money. Paying off the mortgage, buying your dream car, traveling around the world, never having to worry about your financial situation. It is the freedom that you were looking for.
Your destination wasn’t anything monetary related. It is the feeling. The sensation. The ability to do what you want whenever you wanted without ever having to cast the thought towards, can I afford this? Have I used up all my holidays for the year? How am I going to pay the rent? Will I be able to live off my pension? What dreams will I have to sacrifice because I can’t afford to pursue them?
The most important lesson from this post was never about the nature of money. It was about the one valuable resource that we all have. The one resource we will never be able to reclaim. Time. Is giving up a large chunk of your time towards a job that you probably don’t like worth it? Is your life settled on working, coming home, watching the telly? Sleeping, waking up the next day and repeating the same cycle until you retire.
How many more hours of your life do you let slip through because of this pattern? Or perhaps you are fine with that reality. Perhaps you have no other choice but to follow that path for the time being and if that is the case, there is nothing to worry about. Maybe you will get a change in perspective from reading this post. There are those of you that understand the other side. Those of you that have the desire to never worry about money ever again and so I feel the need to remind you.