Money is a virtual fuel that the modern world uses to facilitate most processes in The Game of Life.
It’s supported by nothing other than our mutual agreement and trust that it holds value. We can say that the trust in money is the most universal type of trust for almost all of human society. Different people believe (or don’t) in different gods and ideologies but somehow we all believe in money.
Living in a money-driven world is the current human condition. Is this the best way or simply a step in our collective evolution? This is a tough question. But maybe it’s also not that important. If we learn to understand and care for each other and prevent scarcity among the less privileged, we’ll be happy with or without money as a tool.
But whether you like them or not, you should definitely understand money. And understanding requires getting a bit closer and tossing away barriers and fears, related to money and its absence (scarcity). Don’t be afraid to have or to owe money, it’s just a useful tool in your life, one that should be approached logically, not emotionally.
As we know, money directly cannot buy happiness, love, or any really important thing in life. But money and freedom are quite connected in practice and freedom is what gives space for everything beautiful in life to exist. So under the radar, money is almost everywhere in your life. As we mentioned before, if you were a car, money is the car service. You could theoretically not use it but it would limit many of your options.
By the way the car service comparison is also great to show how much money you need. Not super much actually. Money have a support role in life. Very important but still you do the driving around, the service is just there for you. But if you care about other cars and want to provide a great and fair service to others, you may need more in order to be able to help.
Not having money for essentials, especially when caring for a family, is constant stress that no human should have to go through. It’s a bad situation that leads to bad life choices and we have to understand and likely restructure a bit our capitalist society, so no one is left behind. Universal Basic Income is the buzz word but we still have a much less controversial thing to admit yet: greed is not good:
- Big corporations should stop receiving endless subsidies and tax breaks.
- The financial industry creates mostly nothing and its meaningless branches can be taxed so it shrinks from its overblown size.
- Something should be done about tax heavens.
I consider money to be a “trap word”, one of those general words that we say all the time but don’t really understand.
The other trap words are such because they are general and complex. Work or religion have so many components that our brain has this aura of inconceivable complexity around them and doesn’t really want to go deep in the concept, resulting in shallow choices.
Money, you can argue, is simple, everyone knows what it is and has experience with it from a young age. Then surely we should be able to understand it? Well, no.
The problem is money is a concept of quantity and our brains can’t really deal with those intuitively. There was nothing to quantify when we evolved in a cave with little to no possessions 50,000 years ago.
In life, we need money over a long period of time. As already said, humans don’t have great intuition about time either. So money over time thoughts are a disaster.
Mathematics is here to help but as you don’t want complex equations in your daily choices, we have to find a way to bridge mathematics back to the intuitive level. A lot of this has to do with understanding exponential functions intuitively, which is not that hard once you’ve seen a few.
But math and Game of Life knowledge alone won’t do it. You need to know what’s possible in your relationship with money and understand your Game of Self barriers. Almost all people have them and they are a huge part of the problem.
Let’s try as usual to break the complex concept of money into it’s underlying parts so we can understand it in depth. There should be a general question in everyone’s mind:
Where does money come from?
Now, I’m not talking monetary policy and central banks, fractional reserve system loans and other terminonoly you may or may not understand. This is interesting for economists but has little to do with the average person’s day to day life.
From your point of view as a person, the economy has two main things going on:
- Humans and systems create value (the centerpiece of the economy).
- Value may be converted into other value, converted into money or just lost.
Converting value into money just means storing it as a stable value-holding object that we all mutually trust.
For example you wander about in a forest and you find some raspberries. You pick some up and now you have value. You can do a number of things with the value:
- You can eat them, transforming the value into another value (being fed with a fresh healthy food);
- You can sell them to someone, transforming the value into money;
- You can forget the bag with the raspberries somewhere and lose the value (undesirable);
So money from your standpoint is only sustainably created for you in these two steps:
- You create value
- You exchange the value for money in the economy
Now, you’re not alone in the world, where do other people and companies come into the picture? Potentially everywhere:
- You may or may not depend on others for creating the value;
- You may or may not depend on others for exchaning it for money at a good rate;
There is always some dependence and configurations can be different but the golden question is:
Do you want to be structurally dependent (security) or choose your own way (freedom)?
For the rest of the post we’ll talk about earning money by working and the different ways you can do it. Work is a mixed concept “trap word” and is explored in the work post. It has all the bits and pieces like educating yourself and feeling good at what you do. But here we are in the Money post and you need Freedom in order to maximize your chances for Money and the other important stuff work should bring into your lilfe. Until the end of the post we’ll regard every other component as a consequence of your Money and Freedom.
I’m often asked if everyone prioritizes Money, will enough people want to be doctors, teachers, caretakers? Some people will do it for the love of others and those people have my absolute respect. But both in terms of supplying enough doctors, teachers, caretakers and in an attempt to bring some much needed financial fairness to these largely underpaid jobs, we have the moral incentive to increase social mobility and the Freedom of each person to have access to well paid work. Reducing the low wage exploitation in society cannot be a bad thing on any level. People want to give back, we just need to make sure they have time and resources to give instead of being in a constant struggle to survive.
Here are the two usual ways to go about this:
Be totally dependent and have a day job (participate in the labor market, not directly in the one for goods and services)
This choice has many structural similarities to… living under a dictator.
The day job is structured like a dictatorship. If your boss is cool it may not feel like one. But it they are morally corrupted (and remember, power corrupts easily) or just want to maximize short term profit as a priority, regardless of your needs as a human being, then there is no clear structure in a company to help you out. You cannot vote the boss out or even debate on even grounds at most workplaces. Your only real freedom is to leave the job. But if you need the money short term, this may not be a great option either.
In the end it may be great, it may be terrible, it’s all up to the dictator (boss and work environment). You can’t really change or influence the dictator (boss and work environment) that much. It’s stable (you get a salary), which is a major relief as you can plan into the future. Changes are incremental. Often the only way for carreer advancement is to become friends with the dictator (corporate politics). Sooner or later you get what you can from the dictator (job) and it’s time to… switch the country. A new day job means a new country with another (better or worse) dictator. And so on…
Choose your level of dependency and work for yourself (participate directly in the market for goods and services)
This choice has many structural similarities to… living in a democracy. Everything is a mess. You have freedom to try a lot of things and there is no one to tell you what to do as a country. Sometime you make good choices (elect good leaders) and sometime you elect Donald Trump or vote for Brexit and then instantly regret it. Changes can be big and shake up everything. You don’t know what the future will be like.
If you can’t handle it, you go back to dictator (if you elected Hitler, Putin, Donald Trump or Erdogan it’s an easy path) for better or worse. But if you can handle the mess and don’t long for the simple comfort of authoritarism, democracy can work.
You get to learn and improve. Your choices (the democratically elected leaders) have ups and downs but are better over time. Because progress comes with change, not stability. It needs a mess. It needs freedom.
If you look at the world, you will notice that there are many dictatorships, some more subtle than others. And a bit more democracies.
Not all dictatorships are all-bad and not all democracies are good due to all kinds or reasons – outdated election structure, money in politics, not enough honest politcians to pick from…
But if there is one thing we can all agree on, it’s that on a big time scale dictatorships get worse in the end times of the dictator (Russia and Turkey in recent years are prime examples) and democracies slowly get better overall. Which shows the advantage of messy concepts like Separations of powers. Imagine having three brains and this actually being better than having one 🙂
I gave all these real life examples and comparisons to show that if we managed to sacrifice simple order so we have freedom in society, you can do it in your own life too. It was simpler in the times of kings, you didn’t have to learn about politicians and vote. Simpler but not better.
In the same way outsourcing the decisions for creating and exchanging value to a company in return for a wage is no doubt simpler than creating and exchanging value yourself. It’s simpler to have a king at work. But not better.
And while today may be better with the stability of the salary than the mess of entreprenuirship, think about the diverse experience you need. Where is it more? Where is it real, unconstrained by rules and company policies? Where are the freedom, the creativity and the hunter moves?
I understand that some companies are great. I run a not-nearly-great-enough company myself, where we try to give people as much freedom as possible (though probably the legend Ricardo Semler goes far beyong what we do). But in general no support structure can teach you what the mess of real life can. I only run a company because I was in this mess and learned a lot. No job could have given me the same diverse experience in the same time.
I made it sound like you have to make a life-defining choice today 🙂 This is not the case. If you have a job you like, you don’t have to quit it immediately or at all. It also largely depends what kind of job it is:
Let’s ask what matters for the money you make in the 4 possible cases:
- Crappy day job eg. McDonalds counter – Nothing matters, you’re mostly expendable and paid as low as possible (dramatic take)
- Middle quality day job eg. Administrative job – Experience and loyalty
- Good day job eg. Software Developer – Experience and loyalty
- Entrepreneurship – Experience
(Of course there are many Game of Self factors that matter too, but for now let’s focus on the things you can put on a CV/Resume. By loyalty I mean the amount of time you are willing to stick around and improve at a given job. It’s hugely important for every decent employer).
So everywhere but at the crappy jobs, experience is very important. Doesn’t this mean you main goal as a young person in life is to get experience?
However it’s wrong to measure experience in years. I would want to know how many diffrent things you have experience in. If you did a niche task for 5 years, you’re hardly 5 times as good as someone who did it for 1 year – the difference is more like 10-20%. So repetition leads to waste.
This is where task diversity comes in. In a typical workplace you do a few things. But as your own boss you do way more. And suddenly you have to do all of them well. At the job you could be a 70% effective communicator and get away with it. But now you’re your own sales so immediately you know you have to get our of your comfort zone and improve your communication skills.
It’s not an urgent decision to make. You just need to know that working for yourself usually (not always) means getting more diverse experience and thus investing in a better future. Which can still be a day job! Just one where you’re better appreciated and paid.
Despite all this sound logic, most people who work at crappy or middle quality day jobs consistently refuse to make leaps to better jobs or leaving the labor market altogether so they can have the freedom or working for themselves and invest in experience gathering. Why?
Here we’re entering straight into Game of Self teritory. And boy, where do we start:
- People are held back by inertia and resist change;
- People specifically resist change from something known to something uknown;
- People resist culturally unpopular changes that cannot be well explained to their conservative peers eg. parents;
- People underestimate themselves and overestimate potential trouble;
And all of this is fantastic… for you 🙂
See how I was talking in the third person for a while? This is because the fears of change are not just your fears. They are universal among people, biologically built into all of us. And here lies your biggest chance.
Our economy is built upon the free market system.
Many people have a basic understanding of the main drivers of a free market economy, supply and demand. What they miss is the mind-blowing dynamics of the current world. Every second the sheer complexity of our world creates new demand for thousands of completely different things.
There are billions of completely economically sound business ideas (ones that have more demand than supply) for new products and services at any given moment. And there are even more silly ones (ones where there is no demand or are already in high supply).
Choosing an idea seems hard but don’t think about it as choosing. Think about it as testing, where you test ideas with minimal resources while getting education (experience) as added value, learning by doing from life itself.
This is why I strongly believe it’s pointless to learn something like economics in university. Why pay money to learn in a not-good-enough-similation when you actually live the real thing, money and value are all around you? Get some diversity in your life and the knowledge and experience will pour in.
If creation is not your thing, you don’t have to create! Value can be created simply by extracting it from the inefficiencies of the system. The most common form is reselling (trade).
There are another billions of already existing things that you can resell… and in different ways!
- Buy now, sell in the future when demand rises;
- Buy at one place, sell at another where they need it more;
- Buy in large chunks, sell in small chunks;
+ combinations of the above…
And if you just once hit high demand and small supply from billions of (mostly yet untested by anyone) configurations, boom, you succeed! And even if the success is small and short-lived and not directly replicable, it doesn’t matter. You’ve seen it happen, and now you believe it’s possible and have the skills and confidence needed to find another winning configuration.
Doesn’t sound that hard now, does it 🙂
That fact that everyone else does not take their chances, just increases yours.
You can always trust demand and supply. And the demand for the economic results of risky/hunter moves is high. And the supply is low. So this is where not only the experience is. But also literally the money 🙂
I hope by now you understand the benefits and just have to… make the change X.
Many Game of Life problems look like this:
X looks easy, let’s do it… oops no it’s not and I just learned how bad my understanding is. Hit a wall but got valuable experience.
Many Game of Self problems look like this:
X is objectively easy but it doesn’t feel this way, it feels hard. I see a wall and I don’t try X to find one there isn’t one. I’m just stuck…
So when wondering whether to try X, if you do and it doesn’t work, you still get the experience. But if you don’t try and it would have worked, it just a complete total loss, the worst case scenario. So trying (not-objectively-dangerous) things is just worth it.
I’ll say it just once although if could have been every 5 lines. You have nothing the F*CK to lose by trying!
To help you loosen up, let’s understand some more underlying reasons so you don’t feel any useless paralyzing guilt.
The whole “making money is hard” bullshit is a powerful cultural theme. It was very true for our grandparents, mostly true for our parents and is very much integrated into our dinasour of an education system. By the way if tons of people suddenly use magic to become perfectly rational despite their fears and start everything economically worth starting, opportunities will rapidly close and “making money is hard” will suddenly become true again. However, magic isn’t real 🙂 Fears are real though, people are stuck in sheep mode and so the door is still wide open for you and will be for a long time to come.
To summarize where the Game of Self problem with finance most people have, really comes from:
- Changes into unknown teritory scare the devil out of us. No changes = Less experience and lower earnings. Not your fault, biology.
- We were mostly brought up with the notion that financial success is the result of time and hard work. Zero risk linear growth.
- Therefore we don’t understand exponential growth, proper risk management and most crucially the concept of free money.
- You’ve never heard of free money? How about free value, still no? How about “win-win solutions”? They are all the same thing.
- If you don’t believe in free money, you won’t be able to spot and evaluate win-win solutions. Your innovation rate will suck 🙁
win-win solutions = free value = free money —-> let’s call these free lunches as I know “free money” scares you out 🙂 Baby steps 😀
People simply don’t believe the objective truth of how easy it is to make money. It’s a self fulfilling prophecy:
- Everyone believes there are no free lunches;
- Some amount of free lunches pop around in a dynamic economy but people don’t look for them or pass them by;
- Almost no one has had a free lunch ever and even the ones who have stay quiet or are widely disbelieved by the rest;
- Everyone still believes there are no free lunches…
I was stuck in the same cycle like everyone else. Until one day a miracle happened:
To this day I vividly remember how 14 years ago I found an obvious free lunch in my industry and how my life changed, I suddenly
saw in detailfelt how this cycle works and the amazing advantage I was going to have by simply believing in free lunches. An entirely Game of Self leap. I had undeniable proof that the rest of the world did not find all the free lunches. Were they too lazy or not confident enough was a question intelletually interesting but didn’t really matter. For myself the future answer was going to be “neither”. And I would refocus my work even more to searching for free lunches.
Once you believe that anything is possible, things get easier. This is also a perfect moment to ditch the artificial concept of… goals.
I regard all goals, related to money (and most goals in general) as a stupid unnatural concept. We didn’t evolve for specific goals; When living in scarcity 50,000 years ago it was useless to say “let’s kill 10 mammoths this hunting season”. We got as many as we could because life was harsh, sometime it would be 7, sometime it would be 12 and we’d still fully utilize them.
Goals are a luxury of the modern world and detatch us from our natural tenaciousness for more, the beauty of the unexpected, the power of flow, and the fact that potential is almost limitless.
Now, if we don’t have goals, what do we want and how do we achieve it? It’s ok to want just one universal thing – progress. No details, no pressure, no success, no failure. Just a life of growing younger 🙂
And about that change you want but don’t initiate… Every time you have a strong emotion, consider using it to start the proccess you want to start anyway. Emotions are your chance for an instant win in The Game of Self.
Had a bad day? Start the change and turn a day you would want to forget into one you will remember forever.
Had a lovely day? The sheep vibes are weak, continue the hunter moves with another spontaneous one.
The hardest part is the start of the change. Then it will continue by itself…
What to do once you have complete freedom and have to create value and turn it into money?
Well, I’m not a financial advisior and I don’t give financial adv… cut the bullshit, if I made you change your life direction I’ll have to at least give you some questionable financial hints 🙂 But the responsibility is all yours, remember.
Your ideal relationship with money has three core principles, let’s list them and then we’ll expand one by one:
- Earn as many big chunks of easy/fun money as possible;
- Aim to have enough money so you don’t have to care about expenses like rent and food;
- Investing in yourself and your life/work is better than saving/investing anywhere else;
Earn as many big chunks of easy/fun money as possible.
There are billions of possible money-making activities for you in the world.
Some bring good money, some do not (this is an objective, Game of Life metric, measured in money).
Some are easy to test, some are not (this is an objective, Game of Life metric, measured in the time required to test the profitability).
Some are fun, some are not (this is a subjective, Game of Self metric and you change it by tweaking the activity and your perception of it).
Ideally you want something profitable and fun. You don’t care if it’s easy or hard as as long as it’s fun, hard is fine, hard is challenging. Right? Right. This is the common human logic and it’s perfect for The Game of Self. In fact it’s a major source of motivation and humans are drawn by challenges and hard stuff a lot.
But The Game of Life’s cold logic disagrees profoundly with “hard is good”.
- If an activity is hard it will take time to test and master, which has the single but huge drawback that you won’t have the chance to try many activites over time.
- If an activity is hard, it draws people, who a searching for a challenge. The economic results of such activities are in high supply and you already know what this means – the money is gone and only scarcity is left for most.
So here is our first principle when choosing how to make money:
It better be easy to do what you do so you can test many things in a short time and avoid overcrowded challenges. The risk is to lose motivation so you should just manage motivation carefully.
How do we manage motivation when it’s too easy? There are 2 simple ways:
- You artificially make it harder. If you earn enough money on a 4-hour workday, try to make them 2. It will instantly become harder in a different way, more motivating and fun while still being easy as an activity. This way you reap all possible benefits.
- You tie the activity to core positive emotions. Help people in need with the money and knowlegde you gain. Hire people you care about to work together with you.
Now it’s time for principle number two. You want to be profitable, but so does everyone else. Try to trade stocks and you’ll sense the huge competition instantly. How do you go about finding a profitable activity, whose economic results are not in high supply? There is an obvious answer:
It better be hard to understand what you’re doing. This way no one can see it’s profitable. An obscure niche if possible.
At first easy to try and hard to understand seem contradictory. Until you remember that you don’t need to deeply understand something in order to try it out 🙂 In fact when you focus on easy to try activities, you can try a lot of them and this is the actual way you can find a profitable niche. And it’s profitable because it’s hard to understand (for the others) and you’ll already in it, trying. Now you have all the time in the world to understand it and improve and scale. While earning!
A good hint is to do something that uses an underlying foundation that not all people understand. Like The Internet and websites. And then dive into niches of niches even further to find the golden one. But choose your foundation wisely. It if falls through, you fall too. The Crypto ecosystem is still young and has a massive problem with unstable foundations.
And finally you want to have fun. This is I would say the easiest part. It’s mostly Game of Self and thus subject to improvement all the time. The key is to not plan it beforehand and not try to predict whether an activity will be fun or not. The truth is you can’t… until you’re actually doing it. Almost every daily task can be tweaked until it becomes fun.
And still I’ve heard countless friends say the words “It’s not my thing…” for an activity they have never tried. How do you know then!?
Once you have found (by easy testing) a hard to understand but easy to do, profitable activity, money is solved. Now test every possible variation so you can also have the most fun.
There are so many ways to do anything. It’s more fun when you turn it into a challenge, when you do it with loved ones, when you use it to also help people, when you teach and share success. Have fun! Money gives freedom, enjoy it 🙂
It’s perfectly possible that your easy-to-do, hard-to-understand, fun activity will eventually dry up as an income source. The economy changes and constantly opens and shuts doors. So when you find a good niche, don’t hesitate. Take what you can get and turn it into our favorite: a big chunk of easy money. When you’re profitable but scaling options are no longer visible, search for another niche to add to your activities. It will likely be on the same foundation, so half your work is already done.
Aim to have enough money so you don’t have to care about expenses like rent and food;
One of your main milestones is to stop caring about everyday life expenses. This frees your mind for earning money and makes you rationally bolder. Personal expenses cannot be optimized very much anyway, how much will you squeeze out by monitoring your expenses, 10%?. If you ignore them (without being reckless of course), you can focus on the thing you control 100% – How much you earn. This is where the big improvements are. And by the testing of easy-to-do, hard-to-understand activities, all while having fun, you can grow some pretty good income streams.
Investing in yourself and your life/work is better than saving/investing anywhere else;
Your life is a constant process of improving. From good English (an absolute must if you’re not a native), to computer and tech skills, to economics, to essential knowledge about health and psychology and how people act… Invest in yourself. Find mentors, explore, experiment. Of course for free when possible. But if there is no free way and it takes spending, spend! Money idle in the bank are useless except for emergency use.
Saving for retirement while being less than 35 is an utterly stupid concept and an ultimate sheep move. If you invest wisely in yourself and your skills in this super dynamic world, you’ll have more than enough funds when you retire.
We generally don’t understand how money works and this is a great chance in your life. If you get past your Game of Self fears, forget what your parents and educators told you and embrace the obvious truth that easy earned money do exist, you will start seeing them everywhere.
By targeting good chunks of money by trying easy to test (but hard to understand) profitable strategies around a common platform like The Internet, the chances to financially succeed are massively stacked in your favor.
Money is easier to find than meaning so if you’re stuck, it’s an ok first step. You can find your way to fun and meaning when you already earn money and most important of all, have found freedom. Don’t think that delaying the discovery of your life meaning is always terrible. It’s better than to constantly stress yourself that you don’t have one…
Remember that the people stuck are more than the opportunities for making good money in the economy so some people will always be poor and stressed about themselves and their families. It’s not their fault but a mix of biology and culture. Sadly most of them only ever did what was asked from them – worked hard while being unlucky to join an overcrowded industry. This is how we have built our society. And I feel that the ones who are in a position to compensate a tiny bit of the injustice, why not we just do it.
While systemic changes would be welcome one day, for how we can just share as we earn. It also brings happiness.
We can be fighting rising inequality together, every single day.
The only guaranteed way do to so is to attract wealth by diving head first in our dynamic world… and then share.
And there is nothing stopping you from doing just that.
Well done on this excellent article about money and economic opportunity. It had a motivational effect and will expedite my plans to work for myself and open a business. I particularly liked:
“You can always trust demand and supply. And the demand for the economic results of risky/hunter moves is high. And the supply is low. So this is where not only the experience is. But also literally the money.”