Money Defined

Money Defined

Many people define wealth by the amount of money a person has. Money definitely plays a roll in wealth, but what is money? If you look at money literally, it's small pieces of paper and little pieces of metal. It can be measured by the numbers we print on it and the value we instill in it, but money is essentially a concept.

Money is a measurement

In the olden days, people measured wealth by how many cows, sheep horses or slaves they had. Today it's how many "0's" you have in your bank account, the size of your house and the kind of cars you own. But it's hard to measure wealth from the outside. The family with the biggest house on the block, could be the furthest in debt and close to bankruptcy.

If we look at money as a form of measurement, we need to look at how many positive dollars people have. A positive dollar is money that is unencumbered by debt (net worth). If you have $100 in the bank and don't owe any money to anyone else, you have $100. On the flip side, if you have $100 in the bank, but you owe other people $50, your true net worth is $50.

The more positive dollars you have, the wealthier you are and the more purchasing power you have. Most people in North America have a negative net worth. They owe more on their house, car and other debts than they actually have.

Money is power

Money can give you power, but if you are stuck on a desert island with a billion dollars, it's only as valuable as the paper it's printed on. It's largest value may be as kindling to start a fire that will help keep you warm and alive. If someone offered you a helicopter ride off the island, you would gladly give them all your money. So money is not a true measure of power.

Money is a concept

Money replaced the barter system as a more uniform way to determine the value of products and services. It's a system that worked for the consumer and the merchant.

While consumers buy products and services, merchants and entrepreneurs buy people's time. Employees trade their time for money they can use to buy products and services. It's a never ending cycle, a cycle that has trapped a large majority of the world's population into trading time for money. There are only twenty four hours in a day, so if you're trading time for money, you're limiting your ability to earn true wealth.

When you travel from country to country, you quickly see how money is simply a concept. Canadian dollars aren't accepted in Germany, English pounds aren't accepted in the USA, and each country's money looks different.

Changing the Money Paradigm

A paradigm is a commonly believed concept that may or may not be true. Paradigms have included the world being flat, diseases being untreatable, and you have to work hard to make money. The truth is, the world is round, most diseases are treatable and you don't have to work hard to make money, you have to work smart.

Owning a business is one of the simplest ways to leverage your time by outsourcing much of the work or hiring employees to multiply your productivity. Although it's one of the simplest ways to leverage your time and increase your wealth, it's not always easy.

Another simple way to make money is to invest the money you have. There are risks involved with investing, the same as there are in business, but investing allows you to leverage your money and make it grow with less effort than starting a business.

Although money is an important part of most societies, it's simply a concept. Money only has a value because we've given it a value. Money's true worth is the uniform system of trade that it has allowed us to develop. It's simply a measuring device, similar to a ruler.

Terry Telford is an author, publisher and a hard core entrepreneur. Discover how he builds online businesses to sell, flip, trade, or simply profit from.

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