3. Mindset for Money – Why We May Accumulate It

3. Mindset for Money – Why We May Accumulate It

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In the distant past, when there was no money, the only resource we had was our lifetime. So the time that our body has held out before it goes limp. We invested this time to go looking for food and thereby get more life, essentially to survive. It still wants to be used well today. Everyone (hopefully) has their goals. Unfortunately, most of us cannot devote as much time to our goals as we would like. We still need part of this time today to stay alive, i.e. to provide ourselves with food, domestic security, clothing, etc.

The hamster wheel of (survival) life

Back to the distant past. Back then, with no money, we humans were mostly concerned with this supply. Interestingly, for most animals, their entire life consists almost entirely of this hamster wheel for foraging for food to survive. It’s good that there is still enough to reproduce and raise the offspring, otherwise we would have a real problem with overall survival. Without money, there is little chance of breaking out of this hamster wheel. Our ancestors, unlike most animals, had bodies developed enough that they could devote free time to inventing new tools and technologies. This enabled the search for food to be accelerated or the food to be kept longer and stored. It gave them more time and made better tools and so on. But it was only with the advent of money that trade and thus a division of labor could develop as it prevails today in a complexity that the Stone Age people could only dream of. And with that, compared to then, we have achieved an incredible level of security and comfort in life. Even in the poorest countries in the world there are no longer any predators and we no longer have to live in caves or on trees.

Most people today are still trapped in the same cycle as they were 20,000 years ago. With one difference: foraging has been replaced by work. We get money through work, which we can in turn spend to stay alive, e.g. B. Buying feed. Not just for our hamster. But money has another fascinating quality. You can also NOT output it. If you ignore devaluation and inflation, this is the perfect opportunity to put your own lifetime on the high edge. I work a few hours more than I need to “just” survive and then theoretically I would not have to work as long as I can buy the necessary food with the money saved – and still survive. A fascinating system. So you can see money as “coagulated lifetime”, as non-volatile, tangible time in a fixed consistency that I can put on my shelf and store there until I want to use it up later. The old saying “time is money” is true.

How much time is money – and how that helps us emotionally

If so, how much time is money? Or how much money is time? Can I convert that into each other? The answer is: yes, about my hourly wage. With a net of 4,000 euros a month and 40 working hours a week, I have an average hourly wage of 25 euros (assuming the usual four working weeks per month). And that’s extremely exciting to know. If I treat myself to something that does not contribute directly to survival, e.g. For example, a bar of chocolate or a trip to the cinema, then I can pretty much say how much time it cost me. If I add the chocolate mentioned in the latest 3d blockbuster to the cinema, plus maybe a cola, some popcorn and an ice cream confection, then I have probably spent around 25 euros. So the film didn’t just cost me two hours (the time I actually spent in the cinema), but actually three. I first had to work an hour for it to be able to afford the cinema and the feasts.

Now what brings us to our goal of financial independence? I claim quite a lot. If I know at what “speed” (hourly wages) I can produce money, then I also know how much it really hurts when I lose it again. We learned what the difference between spending and investing is. Investments are essential for financial independence. But investments are also risky. The money invested can be lost, in the worst case completely. In order to get the emotions associated with this loss under control at this point, it can help to work out how many hours of life I am actually investing. Or better, how many hours I would currently need to get back the investment I am about to make in the event of a total loss. If I z. For example, if I know that with an investment of 1,000 euros, that’s only one week of working time, then it might be much easier for me to invest. If everything goes wrong, what can go wrong, I have “only” lost a week. And if the work I have is fun, then I can even look forward to recovering a lost investment.

Joking aside, we should of course not deliberately ignore investments. The fact is that emotional decisions about investments are responsible for a large part of the losses in the population. Fear and greed (exaggerate) the stock markets and cause the excessive build-up of speculative bubbles and the subsequent exaggeration downwards after they have burst. It is important to keep a cool head when investing. And that works best when you can emotionally separate yourself from the invested money as well as possible. Once it has been invested, the money should be viewed as gone or invested. Just like a farmer replanting part of his harvest next spring. Once in the ground, this part is gone for him, until after a while he (hopefully) yields a multiple of the yield. I view invested money as if it no longer exists in my account. Even if I can sell the investment again at any time, like with a share. The sale should never be made because I get cold feet and want my stake back. That would destroy the original investment idea. If I liquidate prematurely, then at the most because I have come to the conclusion that the investment has failed and can no longer be led to success (you realize that you are riding the classic “dead horse”).

Investments as a game

Another possibility is to view the money for investments as play money. In a computer game, I can only spend the resources that I get in the game in the game. And what is the play money usually spent on? For better equipment with which you can defeat stronger opponents and from which you get more play money. Or for the development of new technologies to improve production buildings and increase their yield. A classic investment. In contrast to real life, I can’t use the play money to go to the cinema or to have fun in any other way. The investment in the game is the fun. That is why it does not occur to anyone to not invest the play money. After the end of the game, it expires worthless.

If I put some of my money aside and reserve it exclusively for investments, I can proceed according to the same principle here. The money must be invested, otherwise it will expire at some point, at the latest after the ultimate game over, if it is not eaten up by inflation beforehand. Of course, this requires a certain discipline not to plunder the investment account in between to buy a new television that is one size larger than necessary. And a second point is extremely important: failed investments must be used for learning. This massively increases the chances of winning the next time. Every time one of my investments has not gone as I imagined, I analyze it and try to find the reasons for the failure – so that I can do better next time. Maybe I need some time to get the money I need for the next time. But that worked last time.

Money is neither good nor bad – it always depends on how you use it.

However we twist and turn it, it is important to have a healthy relationship with money. Those who do not like money will not be able to amass so much that they become financially independent. There are tons of coaches, books, and tips out there on how to correct your relationship with money so that financial independence also works. I can pass on two of them from my own experience, I have never read them like this before:

Money in itself is neither good nor bad. It can help to think of money like a tool, like a hammer. You can use it to drive nails into the wall – or holes in heads. It always depends on what you do with it. Anyone who believes that the distribution of money in this world is unjust (1% of people own 90% of the money, Link): there is an exciting reason why this is so (link to history of equal distribution and subsequent redistribution). It is simply human nature that resources, such as money, are unevenly distributed. You don’t have to feel guilty because you have more than others. Unless you have inherited richly or won the lottery, you have usually worked hard for this “more”. And there is no such thing as privileges [link on Facebook video] – or should we say it is not helpful to deny yourself (or others) something just because someone was born into an emerging market instead of a family of rich celebrities . You can even turn it into the opposite: precisely if I intend to use a good part of the surpluses for the benefit of others out of my own financial independence, I am downright obliged to achieve this goal and to amass a lot of money for it. With me it is a lot better than z. B. at a mafia boss or arms dealer.

A second way to improve your relationship to money is with a little mind game. The absolute numbers, which I’ll give you in a moment, may differ over time. It depends more on the circumstances – and they have been similar for centuries. There are currently around 7 billion people in this world. The richest person in the world owns around $ 50 billion. Even if he distributed his entire fortune evenly among all other people, everyone would get just over 7 dollars. For some it is a lot, for others it is almost nothing. The important thing is that it is a one-off effect, i.e. a nice gift even for the poorest of the poor, but not a permanent solution to lift them out of poverty – and the richest person in the world would be broke in one fell swoop. All his money has fizzled out with very little effect and can no longer work for himself. If you consider that especially the rich donate a lot (especially because thanks to their wealth, among other things, they have the time to organize charity events and founding foundations, etc.), then you can see that wealth is in the hands of one individual in a concentration , in which it creates financial independence, can also be good for an extremely large number of others. So, folks: hoard money, become financially independent – and then do good with it!

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