I came from a working class family. One of my first aims in learning was to figure out how wealthy people’s thinking was different from my own.
When engaging in any activity, it seemed prudent to me to first consider the cost. Not bad, but I was only thinking in terms of dollars and cents. It turns out, there are basically 5 different price tags for every pursuit, and money might be the least important. Here they are briefly.
The most precious commodity. You’ve probably heard someone point out that nobody gets more than 24 hours in a day, but really think about it. Let that sink in. The richest, most powerful people on earth can’t get 25 hours in a day. Time is a fixed amount, you can never replace a lost day, and you don’t even know how many of those days you have.
Beyond philosophical pondering, when you start to make time a priority in decision making, it will affect your other resources. E.g., how many poor people do you know spend an hour clipping coupons, recycling bottles, and rolling pennies to save $5? I used to do that sort of thing. How many other things could you do that would pay more than $5 per hour? This leads us to…
The time you spend doing one thing is time you don’t spend doing another. Why don’t attorneys clean their own offices? Because they can hire a professional to do it for $50, and they can spend those two hours earning $600 by doing what they do best. Neil deGrasse Tyson can teach one person about astrophysics for an hour, or he can go on TV and educate millions. Everything you choose to do means many things you choose not to do.
This is a less obvious one, but when you start paying attention, you will intuitively feel it. Let’s try a demonstration. Pick a phone number you haven’t memorized out of your address book. Now try to read a few paragraphs of anything while remembering that phone number. This is the reason brilliant mathematicians show up at work wearing different colored socks, or why an event planner can still lose her car keys. This is also why most successful people have some kind of mindfulness practice and an organizational system. It’s not a quirky spiritual belief or OCD. It’s because mental resources are finite and need to be managed.
This is obvious to investors and mathematicians, but not to the rest of us. Everything involves risk. This is important to understand. It’s not that rare things CAN happen; it’s that they DO happen. E.g., if I drive too fast every day, I may be unlikely to get a speeding ticket today, but I will get one eventually. I can either figure out how much that will cost and how often I will likely get one, or I can slow down until that risk becomes negligible. I would have to consider the amount of time (see #1) I would save speeding versus the potential negative consequences, one of which is…
The most obvious. Money puts an easy-to-grasp, easy-to-convert number on value. You can discuss just about anything in terms of money. For all the attention it gets, it is the easiest to create, substitute, and replace. So understand the other 4 values, and money will make much more sense.
Sorry for the clickbait title. It really was the best way to sum up this post. What do you think?
Photo courtesy of the National Numismatic Collection at the Smithsonian Institution.