Money and Wealth Decoded
To decode something means to translate data or a message from code into the original language or form, which would mean that if we are going to decode something then we are agreeing that someone or something encoded it making it harder to understand.
Have you ever felt that way about money? What about wealth? I mean you feel like it should be easy, but it is not. Like everyone else seems to get it but you. That’s the feeling I mean. I’ve felt that way before too. I didn’t grow up with money. Far from it. I grew up going to food banks because we couldn’t afford groceries, living on the system, and having no understanding or example of what success with money was.
I help people build wealth. But before that, I help educate people financially. You see, the short-lived days of having zero financial literacy and just handing your money over to a financial advisor or broker for them to do it all for you are over. In 2008, people left their retirement in the oven for 20+ years only to find out half of it was gone. We can no longer get away with expecting wealth but have no understanding of money or how it works.
So before I can talk to you about wealth, I need to talk to you about money. The main thing money does is act as a medium of exchange. A medium is an agreed-upon intervening agency. Almost like a middle road that we all agree to use. It doesn’t make sense for us to barter because it is too hard and too slow. We need to have an agreed-upon method to assign and transact values so that we can all get what we want to get in the easiest and fastest way possible. Money became that. A long time ago if you wanted milk, but all you had was eggs, then you’d have hoped that I wanted your eggs to trade for my milk. Because if I did not then you would need to go find someone else who did want your eggs and trade your eggs to them for something I’d want so that you could exchange that for my milk. See how tedious that is? Money came along as a channel of value. If we could all agree that money had an assigned value we could just exchange money for goods and then redeem the money with someone else for more of their goods.
But that doesn’t answer the question of where money gets its value. Well, it used to be that money was inherently valuable. People would use coins that had intrinsic and agreed-upon value. That evolved into money being backed by something of value rather than literally using the valuable thing itself. Over time, governments realized that people relied so heavily on this medium of exchange that it did not even need to be backed by anything any longer and the people would still use it. Which leads to where we are today, using paper money that isn’t backed by anything. So what makes money valuable? Confidence. Confidence that the next person will accept it and that if they don’t, the issuing authority will print more of it or force it to be accepted. Money is like a check. If I give you a check, the only reason you’d accept it is confidence that I have that money available in my bank and the check won’t bounce. Dollars are like checks issued by our government and we all operate off the confidence that these checks will continue to be widely accepted and that the government really does have money in the bank to back up all of these checks.
Money is such a thinly spread veneer of confidence and agreement that it is almost scary when you really consider it. But as long as most people are good at using it, it will continue to work.
That being said, how do you keep more of this money in order to build wealth? For starters, you need to make more. There is no solution for broke other than making more money. I don’t care why, how, or whose fault it is. Go to make more money. If you can’t do that, there is nothing for you to keep. Now obviously you’ve got to also know why you’re keeping it. In this scenario, you are keeping it so you can invest. Why? Because every time you want money you have to trade your time and effort for it doing something you probably wouldn’t prefer to do. So if you want to stop having to do that you’ll need investments that pay your income and allow you to remove your time and effort from the equation.
Keep money means that you control where it goes and you are intentional about making sure more of it goes to you than anyone else. Have you ever been so broke that you were frantic about paying your bills? It was all you thought about and it consumed your mind because you didn’t want to get behind. Honest question…when was the last time you were this way about saving? Have you ever been frantic and passionate and emotional about saving your money the same way you are when you owe someone else? Do you not chiefly owe yourself first if you really intend to be financially free? This has to be your mindset.
As a hint, the big 5 areas that you spend too much money on are debt (including your mortgage), insurance, taxes, and investments. Think about it. You ALWAYS pay those. No matter what. Even at your own expense. If you plan on building wealth then you need to go back and look at how you can reduce these amounts as much as possible.
Next comes wealth and I’ll keep this simple. Wealth mathematically happens when your passive income exceeds your monthly living expenses plus monthly savings and taxes. Simple as that. Passive > monthly expenses + savings + taxes. The effect of this is that you now have full control over your time. No more doing jobs you hate just to pay the bills. No more restricting yourself to make ends meet. No more sacrificing your health because you’re on a budget. This is wealth. Your goal is to get here so that you can gain the ability to treat money like oxygen. You don’t count your breaths. You never breathe less because you are afraid you’ll run out. You never hate your neighbor because they breathe more air than you. Then why would you do it with money?
For the next several weeks I am going to talk and write about the life cycle of a Sacred Account (a tax free savings vehicle that is used to buy cash flowing assets with your saved income), but it starts with understanding money, how to keep more of it, and how to turn what you have kept into wealth.
To learn about how we can help you become more financially educated and make this wealth thing possible for you click here.
If you’re a follower and have not read my book “The Blueprint to Financial Freedom” yet, that is the place to start. This book covers the specifics for each level in the various chapters, and you can grab the book for free as my gift.
Click here to get a copy!
The Blueprint to Financial Freedom by Jerry Fetta
To Purpose, Wealth & Freedom,
Jerry Fetta
Jerry Fetta is the CEO and Founder of Wealth DynamX. He is a nationally recognized financial expert featured in Forbes, Yahoo Finance, Fox, Chicago Weekly News, New York Finance, interviewed on over 45 podcasts with world renowned experts, earning endorsements and affiliations throughout his career with names like Kevin O’Leary, Grant Cardone, Dave Ramsey, and Pamela Yellen.
Jerry’s mission in life is to help create millions of financially educated and solvent families achieving greater financial freedom and sharing the truth about money with those around them.
Learn more at www.WealthDynamX.com
(DISCLAIMER: The information in this content should not be considered tax, financial, investment, or any kind of professional advice. Only a professional diagnosis of your specific situation can determine which strategies are appropriate for your needs. Wealth DynamX can and does not provide advice unless/until engaged by you.)
