In business and in life, we like to feel informed. I must confess that since 2008 the degree of business and financial information available and gathered has been growing exponentially. We now have on-the-spot updates and financial predictions that are delivered with such convincing aplomb that we believe they must be accurate and based on extensive analysis and complicated algorithms. The numbers displayed seem head-turning.
Billions are referred to as pennies used to be referred to in the old days. As you know if you have read any of my earlier writings, I am not into politics, and I am not equipped to see it as a good or bad thing. It is what it is. One thing that has evolved, though, is the relationship we seem to have with money. That got me thinking: has money become such a fundamental foundation stone to all we do, that its importance in our needs has changed?
Is Maslow’s hierarchy diagram of needs accurate, or must we readjust it and create a special space for money, and only money? And if so, where to position it?
Money, we are taught, was the object used to achieve and acquire things, a tool that assists us in achieving wider goals and implement socio-economic value-based ideas. Recently, it seems that money has become the object, focus, and goal to be reached. Money is a stand-alone overall objective. Money is not anymore a tool to achieve and implement visions. All seems to be tested against the value of money and how much is possessed.
To me, the intriguing aspect of it is that money experts are promoting that to make money you do not need money; you borrow and create debt, and as soon as the debt generates profits, you retain profits and create more debt. Some promote compounding, a concept whereby money interest or dividend accumulates exponentially before it is given back to the investor. Lovely in theory but hard to find any such products for non-institutional investors. Money has become the core goal. Yet, money is not needed to achieve money. It is the Goal.
This is a subtle but, in my opinion, massive shift.
Up to recently, money was an instrumental tool needed to start something that would be value creation and that something could therefore be resold, used, licensed, or implemented hopefully for a higher return. We now seem to skip the first step and focus on the outcome. Not in an aspirational way to achieve a target, but as a given that the target will be achieved so we leverage what money is the profit of it to start the project.
This was made famous by the .com bubble and tech businesses in the early days where valuations were based on potential market, where the value of a company was higher before a product was launched as this was the highest potential buzz. That valuation would then be used to convert shareholders into very wealthy individuals and valuations turned into real money. That is where the real money would be materializing for the risk-taker. We all know how that ended.
Luxury items and super sport cars are a clear example of this transformation. To me, luxury items and super sport cars are a manifestation of our individual relationship with money. Owning a super sports car was always part of my intended rewards. I love them, love to drive them, and I self-identify as a sports car lover.
To me, having the opportunity to buy the car I always wanted was an aspiration and a reward for long-awaited achievements. When I managed it, I mixed with others with the same passion.
Or so I thought. Increasingly I see people looking at super sports cars like an investment, a way to make money. And some experts even talk on camera monthly on the cars’ value fluctuation, creating stress and anxiety in some of the owners as they are learning that the value of their loved car may have dropped 6% in a month if the car has been driven… I just think that a car is for enjoying the ride, not an investment! Back to money though.
Financial literacy is key to understand and establish a great rapport with money. It is also fundamental to acquire the relevant knowledge to demystify a tool we use on a daily basis without fully understanding it. A great read is “The Psychology of Money” (Morgan Housel) that highlights the interaction between us and money and how it varies. As a contemplationist, I always aim to gather enough information to form an understanding.
The more I reflect on the topic of money, the more it seems that it is as simple and complicated as one decides it to be and that there is no right or wrong, just what works for you. I noted that those focused on working for money behave very differently than those who make money work for them. The first care far too much and are treating it like a temperamental divinity; the latter have a more tool-like approach to it and always seem to find creative ways to make more of it.
To me, Alan Watts summed it up brilliantly when, pardon my loose adaptation of his statement, he said that considering money the goal is like going to a restaurant and eating the menu. I agree. Hence maybe, money experts do not seem to hold much scrutiny over a period of time: they are paper congested from eating all these menus!
