In this post I’m going to begin to show you how to start to see the hidden wealth opportunities that are all around you.
What I’m about to teach you is just a teeny tiny bit of what I’ve learned about money and wealth in the last few years.
For the record, I didn’t grow up knowing this stuff and while I wish I learned this stuff sooner, I’m glad that I learned it in my 30s as opposed to my 60s or never.
My promise here is that you’ll have a fundamentally better understanding of how money works and how to create wealth better than 99% of the adult population.
And you’ll also learn two of the most shocking truths about money.
The first shocking truth is that wealth does not equal money. They are closely related but they are very different from one another.
The mistake that nearly 99% of the population makes is that they think that amassing a ton of money will make them wealthy.
The sad reality is that nothing could be further from the truth.
If you have all the success with money and wealth that you want, then what I’m about to say here may not be all that interesting to you.
Also, if you grew up in an affluent family and you learned all about money and wealth, then I probably can’t help you as much because you’re probably much further ahead than me.
Because I didn’t grow up in a wealthy family. My parents, as good, hard-working and well intentioned as they were, were not aware of and did not teach me what I’m about to teach you.
And so the people that I’m more apt to help are the type of people who didn’t grow up wealthy but are hungry to learn how to create it and close The Money Gap once and for all.
So what is The Money Gap?
The Money Gap is simply the huge distance between where you are with money and financial success – and where you want to be.
If there’s anyone who understands the money gap, it’s me. I grew up in a working class family and my parents were good, hard-working people that provided me with everything that I needed but not a whole lot more.
They encouraged me to learn as much as I could so that I could position myself for a better life than they had – and what they meant by that was getting an education so that I could have a better job, and in turn make more money than they did since they lacked those things when they were growing up – that was their idea.
When I was young and in school, I was a voracious learner (and still am). I loved to read books and take tests and to raise my hand. I wanted to learn everything I could to be successful and would listen to anybody who would teach it to me.
The other kids didn’t like that and I was always dubbed a nerd or smarty pants or whatever (it’s that tall poppy syndrome and I’ll write about that some other time).
And so I was taught to think that the secret to success was to go to school, get good grades, and get a safe secure high paying job and live happily ever after. And a part of me thought that achieving these things would make me an outcast, but that’s another conversation entirely.
When I first started learning about money and investing, I had just graduated from college, quickly passed the CPA exam, and got a job as an auditor at a public accounting firm. When I started that job I got the option to select all of my “employee benefits” including health care cover and this thing called a 401k (something I never heard of).
For the record, my parents didn’t know or teach me anything about investing, because they knew nothing about it themselves. In fact, anything I heard about money growing up was mostly through the filter of my mom and dad’s screaming fights about it.
Needless to say the topic of finance was at best nonexistent and at worst flat out unpleasant.
But when I first started learning about saving and investing and compounding my money, I decided that I wanted to be rich. I decided that I never, ever wanted money to be an issue or a limiter in my life.
And so I thought that amassing a million dollars would make me rich.
Except that with living expenses, and pay raises that didn’t keep up with them, amassing a million dollars seemed like an arduous task.
Needless to say I had no clue about how to close the gap between where I was financially and where I wanted to be.
So how did we get to the point in our lives where we work so hard for money and constantly live in worry about it? Or striving or stretching for it.?
And why do so many people work so hard and it seems that no matter how much money they make, it’s never enough?
Once you read what I’m about to share, I think you’ll begin to see why so many people struggle with money.
You see, I believe that the reason that most people struggle with money is because most people are trying to make more money, when they should instead be focused on creating wealth. And they are not the same thing.
Because chasing money is a worthless activity.
Why? It’s because money itself is worthless.
Let me explain what I mean.
The second shocking truth about money is that it stopped being valuable many years ago, yet people are still led to believe that it has value.
When we use money, transact money, trade things using money, we are led to believe that the value is in the money.
We humans get programmed at a basic primal level to think that the value is in the paper or in the coin, and it’s not.
The more we think this way, the more we become programmed, the more it gets built into our language like “take some money out of our house”.
It’s all wired into the way that we think, and we actually start to think in money. This is the biggest way we get disconnected from true value.
First we go from being programmed that value is money, then we start thinking in money “I need to get some money” which removes us another level from value.
And quite frankly, most people have become disconnected from their sense of value, but here I’m about to wake it up.
So what is money really and why does it have no value?
Here’s a very brief history about money (and I’m skipping a lot in the interest of time):
As we evolved and trading things got more complex, we needed something to simplify trade. So we humans invented this thing called “money” which would be accepted by everyone we traded with. Originally money came in the form of items like shells, rice, trinkets.
At some point, we switched to Gold, which for thousands of years has been considered the ultimate form of money.
When money itself has actual value, it’s called commodity money.
At this stage, money was straightforward and made intuitive sense. If no one wanted my rice, I could just eat it myself. If no one wanted my Gold, I could make jewelry.
Fast forward a little bit more in the history of humanity, and we created something that wasn’t a commodity itself, but acted as a promise for the commodity.
So paper notes and coins were created that were backed by things like Gold and Silver.
That means these notes could be exchanged for Gold and Silver, and this was called representative money.
It represented something of value. This was known as the Gold Standard in the US.
Fast forward a lot more (and I’m skipping a whole lot of monetary history here) but in 1971, a very controversial decision was made by the United States. The US dollar (and all other countries’ money) was forever severed from the Gold standard.
The United States no longer needed anything in its vaults to create money.
Paper notes were disconnected from Gold and Silver and real value completely. It no longer had anything physical to back it up. Today it’s just a piece of paper with a promise.
This is called Fiat money, or currency, which is simply money that is backed by the full faith and credit of the government that issues it.
So now money is just a promise – and promises are sometimes broken (and that’s a story for another day).
Governments realized that we would just accept a piece of paper with numbers printed on it that had nothing backing it up. They got smart (frankly).
So we moved away from things that had real value like Gold and Silver to things that had no value like paper.
Now, to take us one step further away from value, we’ve now moved to numbers on a computer screen to represent money.
And another thing to understand about money is that it iss constantly being diluted.
When governments produce or “print” money more rapidly than goods and services can be produced, the money supply overtakes the value of the goods and services that currently exist.
The new money dilutes the value of the old money in circulation.
This is called inflation. And I have a lot to say about this topic.
Governments create inflation as a matter of economic policy. And then they complain and tax you on it (again, another story for another day).
The fact that money can be diluted should tell you that it has no value.
But we have a really hard time understanding that.
To clear up what I mean, let’s say that I’m a jeweler, and I make a pair of diamond earrings that are worth $10,000 and someone agrees to buy them from me in 6 months time.
I get excited and I make 9 more pairs of $10,000 diamond earrings.
So 6 months later, my buyer comes to buy the earrings, and she’s surprised that I have 9 more pairs of the same earrings just like she agreed to buy
Then she says “you know what, I can no longer offer you $10,000 for that one pair of earrings because by creating more earrings, you’ve diluted the value of that one pair of earrings.
I can now only offer you $10,000 for all 10 pairs of your diamond earrings.”
Does that make any sense?
Hell No! That’s not how things work.
But that’s how money works. The more of it that’s printed, the more it gets diluted.
And ever since money was disconnected from something we could clearly see had value, we’ve had a very hard time understanding it.
And This lack of understanding causes us to make horrible financial decisions every single day of our lives.
Having said all that, at a deep level, we still intuitively know what value is, we just aren’t trained to see it in other areas of our lives.
So money is now confusing and doesn’t make natural sense to us like it used to.
Which is why so many people take their money and invest it in things that have no value.
In the next post, I’ll go through some of the habits that are probably preventing you from creating wealth.
But for now, let me ask you, how big was or is your current money gap? Leave a comment below and let me know.