Category: Money | Finance
What is the Definition of Money?
Let’s start out with Wikipedia‘s definition, fairly scary, but it’s a place to start…
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Any kind of object or secure verifiable record that fulfills these functions can be considered money.
Let’s look at another definition, this one from Investopedia, notice the similarities, AND what is missing…
Legal tender is a type of payment that can lawfully be used to meet financial obligations. Money, as legal tender, is a commodity or asset, or an officially-issued currency or coin that can be legally exchanged for something of equal value, such as a good or service, or that can be used in payment of a debt.
Go ahead and take a look at a resource that the US Government supplies to our youth at Kids..gov, it helps explain how to make money, what not to spend it on (like candy, fast food, etc.) and how to save it so you can spend it on bigger purchases (like inline skates, bicycles, etc.)…
Scary stuff if you ask me!
No where that I could find is the real definition of money and how to handle it shared with us. And, we have all heard the term the ‘98%ers’, so we know that the majority of people, yes parents, have not learned the real definition of money, so they are not teaching their children what money is.
And, tell me, anyone, is there one class in any grade school that teaches our children anything they should know about money?
Here is the true definition of money as I see it…
Money, whether it be in the form of paper, coin, goods, or any other form you decide to accept, is what you receive in trade for your time.
Your time has value, that value is determined by what you are able to do, to accomplish, with the limited amount of time that you have.
How do you add value to your time to make more money in the same amount of time? Simple, maybe not so simple, but the concept is simple, you learn more about what your focus is.
You want to be a brain surgeon, you don’t learn how by cutting open skulls, you learn by going to school, starting with the basics and then moving in to classes that will prepare you for what you will learn in medical school when you get there.
The same is true of money, and except for a few souls that still live off the land (or ocean), we need money. And, we could all debate how much money we need, and how much we need to make, but that is a philosophical discussion, and not the point of this article.
We need money, we will trade our time to make it, UNTIL we get to the point where we can get our money to do the work for us.
Those early years, those years the Kids.gov need to share, that schools and parents need to share with our youth, are the years to learn and form the money HABITS that will last a lifetime.
The good news is that no matter how young or old you may be, you can start today to change your money HABITS.
Let’s mention something else on our journey to learning about money habits, the old saying ‘Don’t put all your eggs in one basket’ is ludicrous UNTIL we have our money making money for us.
By dividing your time, your focus, on multiple ‘niches’ at one time, dilutes by 60%, or more, your time from your main objective. If you are a marathoner, but love to sing, you are not going to be singing while you are running. You are going to be focused, your pace, your breathing, dangers on the road ahead, by attempting to sing you will be diverting your focus and the chance for error is great.
When Michael Jordan was growing up, sure he went to school, but what was he doing every morning, every evening, weekends, every free moment he had? Bet he was not trying to figure out E=MC2, I’d lay my last dollar that he was thinking about how to be more consistent with that dunk from the foul line, or that three-pointer from the corner.
Michael was not focusing on making money, he was focusing on the perfection of his passion, basketball!
Do you want to make more money, so that you will achieve that point in life where you do not have to worry about money?
It starts from where you are, yes, where you are right at this moment, and what you PLAN to do as you move forward in your journey. And, the one and only place to begin is to know where you stand, right now, at this moment, with ALL your finances; bank accounts, credit cards, loans, monthly bills, medical bills, etc. Set up a spreadsheet, or some type of ledger, enter your current balances, know what you have!
In our next article we will take this one step further, read What is the Definition of Money; Revisited…