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What is Money?

Money. What is it? Is it simply a medium of exchange? Is it freedom? Or is it a story?

Before I start, I would like to clarify what I mean when I make use of the term “story”. A story for me is a fictional, social rule and/or construct that we accept to follow and/or abide by as an individual, culture or even country. (If you would like to learn about how fake-news, fiction and stories shaped the evolution of homo-sapiens and civilisation then I highly recommend you read any of Yuval Noah Harari’s books).

I will be using the term ‘story’ in that sense a lot in my blog and so wanted to clarify explicitly what I mean by it in my writings.

In the next few blog posts, I will be sharing all the knowledge and methods I have learned about money and what you need to do to take active control of your finances. However, before diving into the technicalities of the subject, I believe it is important to take a step back and firstly think about what money means to us. What we think of money has a huge influence on our financial decision making.

What we think of money can be greatly affected by our upbringing and life experiences. To give an example, if your parents were very frugal, you may tend to overspend in your adulthood. Generally speaking, big spenders have often been linked to a response to feeling deprived when they were children. On the other hand, perhaps due to a deprived childhood you unintentionally developed a bad relationship with spending, to the point where you fear spending money at the cost of enjoying life. (see Forbes’ article for more examples).

Whatever definition of what money is to you, it is important to remember that the definition you give it is simply a narrative. A story. We have told ourselves this story and it is possible to change it if we feel like this narrative is no longer serving us.

A Long time ago, before 600BC, if you wanted a good or service, you had to barter. That is simply, exchanging a good or service for other goods or services without using money. This was a very inefficient system. If you didn’t have the good or service the other person valued, then your chances of getting what you needed were almost nil.

Therefore, we humans came up with a very clever system. We gave a piece of paper a story. That story is: you can exchange this piece of paper for goods or services, and the person who receives it can do likewise. Money is worth only what society believes it to be worth it.

I truly believe it’s important to remind ourselves of what money is from time to time. As for most things in life, humans came up with stories in order for them to serve us.

However, sometimes we get caught up in the narrative, lose ourselves a little bit and end up serving them. For example, some people develop an obsession with accumulating money, at the cost of spending time with their loved ones or pursuing their interests and hobbies. I doubt anybody’s final regret on their deathbed was “I wish worked more”.

Does that mean you should not care about money at all? No, of course not. Money is certainly important, and you must learn how to manage it if you want to live a somewhat comfortable life in the 21st century. Managing money is not all mathematics. In fact, a large proportion of being able to manage money competently has to do with behaviour and psychology. In my future posts, I will explore certain financial decisions where the psychological benefit can greatly outweigh the mathematical logic.

The point I’ve hopefully got across is that, it’s important to be mindful of what money really is. You may find that at some point or another, reminding yourself of the narrative can give you valuable insight when confronted with tough decision-making involving money. Don’t lose yourself in fiction.

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