Poverty, Prosperity and Definition of Money! (Part II).
(The first law of Money)
Another question we usually ask in our Wealth Creation Seminars (WCS) is:
Mention one major difference between the rich and the poor, to which the average answer is, “money”.
Many people boldly tell us that the rich have money while the poor don’t.
Well, we will like to boldly disagree! The major difference between the rich and the poor is not in the money they have. Of course, we agree that the poor does not have money, but also we make bold to say that the rich also do not have money!
The rich have “something” else other than money! Recall once more, what is money?
“Money is a medium of exchange”. So if I have plenty of “things” (it may just be ideas) to exchange, I will have plenty of money. If I have little things to exchange, I will have little money and if I have nothing to exchange, I will have no money.
The amount of money I can have is directly proportional to the amount of exchangeable “things” that I have. So, the rich are not rich because they have money, but because they are exchanging “things”.
Secondly, the rich know that no matter the amount of money he has, if he stops exchanging things, his money will surely dwindle. So, he gets money divides it into two major parts.
- To be used to exchanged for things he needs.
- To be converted into things that can be exchanged later with profit. (We are talking about investment here).
The poor on the other hand, gets money only to keep buying things till the money is exhausted. If the money does not finish, he won’t stop. He may not even see the need for tomorrow and so might finish the money in a swoop of buying spree. And who is he buying from? The Rich! Some people have got some money enough just enough to buy a car, they used all of it and bought the car, only to discover that they can’t maintain it.
In part 1, we took a look at the definition of money: a medium of exchange of “things” rather than what we use to buy “things”.
In our Wealth Creation Seminars (WCS), we usually emphasise this understanding of what money is and what it is not. We also state clearly that poverty is not necessary “lack of money”.
The average African thinks that the summary of his problems is “lack of money”. He believes that once he has more money he will live a better or even an abundant live. Even our definition of what constitutes “better life” is flawed. Some mansions, designer wears, latest models of cars, etc.
Well, lest we give the impression that these things are not good, it is noteworthy to state clearly that these things are all okay. It is good to live in a good house, to be clothed richly, to what we like and whenever we want them, yet we must realise that having a great life is not in the abundance of things we possess. Let us leave that for another day!
The point here is this: what is the point of buying a car, when you cannot maintain it. Why would someone use all his income to buy a home theatre and then suffer hunger for sometime because he has no food?
There is a very big difference between needs and wants. Financial intelligence starts from drawing the line between the two and then understanding the need for control. This will bring us to the first law of money!
- Thou shall not consume all your income.
See you next time.