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3. Mindset for Money – Why We May Accumulate It

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In the distant past, before money was invented, the only resource we had was our lifetime: the time our body stands the gaff before it ultimately runs out of steam. We had to invest this time mainly to survive, by hunting or gathering some food so we could prolong our life for the next few days. Even today, we usually have a strong wish to use our lifetime well. Everyone has his or her own goals, hopefully. Unfortunately, most of us cannot devote as much time to pursue our goals as we would like. We still need a good share of this time to stay alive, that is to provide ourselves with food, domestic security, clothing, and so on.

The Rat Race of Survival

But let’s go back to the distant past. Back then, without money invented, we humans were busy with supplying ourselves for most of our available time. Interestingly, for most animals, their entire life consists of this rat race of foraging. It’s good that there is still enough room for reproduction, otherwise we would have a real problem with evolution on this planet.

However, without money, there is little chance of breaking out of this rat race. Unlike most animals, our ancestors had bodies and brains developed well enough, so they could invest some free time in inventing new tools and technologies. This made it possible to accelerate the search for food, and even to store and preserve the food. Our forefathers gained more free time and with that time, they could improve their tools and procedures. But it was only with the advent of money that trade and a division of labor could develop. Today, those advancements prevail in a complexity the Stone Age people could only dream of. Money allowed us to achieve an incredible level of security and comfort in life. Even in the poorest countries in the world, there are no major predators for us humans and we no longer have to live in caves or on trees.

Unfortunately, today most people are still trapped in the same cycle as they were 20,000 years ago. But with one difference: direct foraging has been replaced by what we nowadays call work. By working, we get money, which we can spend to stay alive: buy food, pay the rent etc. But money has another fascinating trait: you can not spend it. Let’s ignore inflation and other means of devaluation for a moment. Then, money is the perfect means to salt away a portion of your lifetime. Just work a few hours more than you need to survive. Then, in theory, you can have a break from work as long as your savings last to buy food. A fascinating system. So you can consider money as a coagulated lifetime. Time becomes something non-volatile, something tangible. It gets transformed into matter, something with stable consistency that I can put on my shelf and store it there until I want to use it up later. The old saying “time is money” is actually 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 those two units into each other? The answer is: yes, I can. To do that, I need my hourly wage. As we saw in the last article, if there’s a sum of $4,000 on my monthly paycheck and I work 40 hours per week, I get an average hourly wage of $25. And knowing that is extremely fascinating. For example, if I indulge my sweet tooth or reward myself with a nice movie evening in the cinema, that is if I spend money for something that does not contribute directly to survival, then I can exactly tell how much time it costs me. Lets say, I want to watch the latest 3D blockbuster and during the movie, I enjoy a coke, some popcorn and a chocolate bar, then I’ve probably spent around $25. The movie didn’t just cost me two hours of my lifetime (the effective time I spent in the cinema), but actually three. To be able to afford the visit to the cinema, I first had to work the extra hour to earn the money I paid everything with.

But what has this got to do with financial independence? I say: quite a lot. It can help to restrain the fear of losses. This fear is often highly overrated. If you know the “speed” (hourly wage) with which you can produce money, then you also know how much it really hurts when you lose it again. We already learned about the difference between expenses and investments. Investments are essential for financial independence. But investments are also risky. The money invested can get lost. And that thought of losing money can be scary. Sometimes even so scary that it’s more comfortable to skip the chance, even if the investment has a really good risk reward ratio.

I want to control this irrational fear so I can judge my investments as best as possible. For that, it can help to calculate how many hours of life I am actually investing. Or let’s say, how many hours I would need to earn back the money invested in the event of a total loss. Let’s say I want to invest $1.000 in stocks. The decision might be much easier for me if I know that this is only one week of work. If everything goes wrong, I have lost “only” a single week. And if I consider my work as fun, then I can even look forward to regain the lost investment.

Joking apart, of course we should not deliberately let investments go down the drain. It’s a fact that emotional driven decisions are responsible for a huge part of the losses when people invest in something. Fear and greed drive the stock markets and cause the excessive build-up of speculative bubbles and the exaggeration downwards after the burst of the bubble. It is absolutely important to keep a cool head when investing. And that works best when you can emotionally detach yourself from the money you want to invest. Once the investment has been made, the money should be considered as gone – or as invested. Just like a farmer who replants a part of his harvest in the next spring. Once in the ground, this part is gone. It can no longer be eaten. Until, after a while, it yields a multiple of the amount once planted.

I consider money invested as if it no longer exists on my bank account. Even if I could sell the investment at any time, like with stocks or bonds. Never sell just because you got cold feet and you want back your stake. That would render the original investment idea useless. There’s only one reason for premature liquidation: over time, you have come to the lasting conclusion that the investment has failed and can no longer be led to success – when you realize that you are riding a dead horse.

Investments as a Game

Another way to emotionally detach yourself from the fear of loss is to consider money to invest as play money. When you gather some money or other resources in a computer game, you can spend those resources in the game only. And what is this play money usually spent on? For better equipment – which gives you the possibility to defeat stronger opponents. And those yield more play money. Or you can spend the money for the development of new technologies to improve production buildings and increase their yield. All of those possibilities are classic investments. In contrast to real life, I can’t use the play money to go to the cinema or to indulge myself with some sweet treats. The in-game investment is the fun. That is why it does not occur to anyone not to invest the play money. As soon as the game ends, it becomes worthless.

In real life, you can adopt this gaming principle by putting aside some of your money on a separate bank account. The money on this account is exclusively reserved for investments. It must be invested, otherwise it will expire, at the latest after the ultimate game over, your own death. Of course, it requires a certain discipline not to occasionally plunder the investment account, e. g. for buying a new television that is one size bigger than necessary.

And a second aspect is extremely important: failed investments must be used for learning. This massively increases the chances of winning at the next attempt. Every time one of my investments has gone bad, I analyze the circumstances and try to find the reasons for the failure – so that I can do better next time. Maybe I need some time to get more money for this next try. But saving money already has worked last time.

Money Is Neither Good Nor Bad – It Always Depends on How You Use it.

Whatever we do to get better at investing, there’s one important aspect everyone has to deal with if you want to be successful in the long term. It is important to have a healthy relationship with money. Those who do not like money will not be able to aggregate that much that they become financially independent. It’s like a self-fulfilling prophecy. If I tell myself that money is bad or that I don’t like money, my subconscious will pull various levers and ensure that big money stays out of my life. Anyone who has been hopelessly strapped and wants to change that, should start by tapping themselves for negative beliefs about money. And that’s not as difficult as it might sound right now. I have dealt with this topic in great detail and I’ve found a lot of coaches, books and tips how to straighten one’s relationship to money — to an extend that financial independence is perfectly achievable.

That’s why I don’t want to go very deep into the topic here in this article. On the contrary, I encourage you to follow the links above and read on from there first. Especially if you haven’t heard much about the topic until now. Even at the risk of you leaving my blog. ‘Cause I know you’ll come back sooner or later. I have a few tips for you out of my own experience that I have never read anywhere.

And if you still want to learn more about monetary beliefs from me, then please let me know in my feedback survey. Right after reading my personal money mindset tips:

Money in itself is neither good nor bad. It can help to think of money like a tool, e.g. like a hammer. With that, you can drive nails into walls – or hit holes in heads. It always depends on how you use it. The example may sound a bit gross at first, but it illustrates the quintessence very brief, concise and memorable. If you think about it, you will come to the conclusion that money is actually a great thing. After all, who wants to use money to harm others intentionally?

Many prejudices against money are based on the assumption that it is unfairly distributed in this world. So many people feel guilty because others have less than they do. Wikipedia says, the top 10% of adults hold 85%, while the bottom 90% hold the remaining 15% of the world’s total wealth. A common argument against wealth is that it is unfair to have so much while there are other people who have almost nothing. I thought about this dilemma for quite some time and finally I figured out the error: Equal is not the same as fair. The distribution of money in this world is about as fair as the fact that birds have wings and we humans don’t. Or that certain flowers are red and others are blue. It just so that some people were more favored by life from birth than others. It’s a fact that some people are better at dealing with money than others. And those who have learned to deal with money will also be able to hold and grow their assets.

Let’s assume for a moment, that some divine power would at first confiscate all the money in the world and then distribute it completely even to all people on earth. I claim that just a few days or maybe even hours later, some of the people, who had more than others before, will again own more than average. Simply because they have learned to deal with money.

The good thing is: everyone else can learn that too. This is one of the reasons I write this blog. You don’t have to feel guilty because you have more than others. Very few rich or famous people were lucky enough to inherit a fortune or to win the lottery. But the majority of wealthy men and women usually worked very hard for their possessions. They earned it. It isn’t helpful to deny something to yourself (or to others) just because someone else was born into a threshold country rather than a family of wealthy celebrities. You can even use this thought to your advantage: especially if you intend to use a part of the gains from my investments for the benefit of others, you are positively obliged to achieve this goal and accumulate a lot of money. First of all to support your lifestyle. And any surplus you can use to do good. With enough passive income, you’ll have spare time for charity. With that intention, the money is in better hands than if it would be owned by a mafia boss or arms dealer.

There’s another way to improve your relationship to money. Let’s do a little mind game. The numbers I’ll give you in a moment may vary over time. The absolute amounts are not that important, pay attention to the ratios — they have been alike for centuries. Currently, round about 7-8 billion people live in this world. The richest person in the world owns roughly 170 billion dollars. Even if he would distribute his entire fortune evenly among all other people on the planet, each one would only get something about $20. For some, this is a lot. For others, it is almost nothing. The important thing is: this re-distribution is a one-time effect. It’s a nice gift 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 would have fizzled out with very little effect and can no longer work for himself. Please keep in mind that the rich in particular donate extremely large amounts — precisely because, thanks to their wealth, they have the time to organize charity events and establish foundations. So if a single person manages to amass so much wealth that it makes him financially free, it can be beneficial for many other people as well, if he can keep his money. So folks, hoard money, become free — and then do good with your riches!


Money is like coagulated lifetime. The hourly wage is used to convert the lifetime available into money and vice versa. This helps to rate investments: How long would I have to work to get back the money I want to invest? This approach also can help to get irrational fears under control. Fears which prevent proper investing. Another approach to get those fears under control is to see investments as kind of a game. And even if I fail, the most important point is to learn from such a failure for the next time.

Money is neither good nor bad. It is more of a means to an end that keeps today’s modern world going. It’s important to clarify your relationship to money, otherwise it will be difficult to make enough for financial freedom.

The next article from the “Basics” series continues here:

4. Handling Money

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