It’s hard to build wealth, which is why it’s so important to understand and know for yourself exactly why you’re doing it.
I’ve written over the years about different strategies on how to build wealth.
For example, I have a detailed method on where to put your investing money such that you maximize your returns and tax-advantages.
And of course, my plan to get out of debt before starting to invest.
All of this assumes, a priori, that we want to build wealth. And I guess we all just kind of assume that.
But that said, it’s worth us asking ourselves: why do we want to build wealth? Why bother?
Life doesn’t have a score, and if it did, that amount of money you have wouldn’t be it. And the amount of money you have after the day you die matters not at all, at least not to you.
So what’s the point?
For us to answer this, it help to ask ourselves the question of what money is for.
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What can we do with money?
Here’s a short list of what we can do with money:
- Stuff. This one is obvious, but we have to start somewhere. We can use money to acquire goods and other objects to improve our lives.
- Experiences. Not everything needs to come in a box. Travel, that service we say we want, even if we don’t show it, is something we can buy. So is a concert, a tour, or a cruise.
- Security. Money helps us feel more secure. When you don’t know how you’d pay for an emergency, that can keep you up at night. But when you have money, you have answered that question for yourself, and can sleep soundly.
- Status. We want to feel successful, and we want to be seen as such. So we have money so we can show off a high level of status in our peer group and community.
- Make more. “Money makes money”, as the saying goes. And when you have money, you can invest it to make more of it.
Give it away now
But that’s not all we can do with money. We can also give it away.
It may seem wild to spend a lifetime acquiring money, only to give it away, but it’s actually really fun. You can give money or buy things for people you know, such as family and friends, or make a donation to your community or a charity. You can do this and have it be known, or you can do it anonymously, which is fun in a different way.
And you don’t need to wait until you’ve acquired lots of money to give it away. In fact, it’s probably a good idea to have some practice with giving before you’ve gotten wealthy, so it won’t feel so foreign to you.
And what’s the difference between giving when you don’t have a lot and giving when you do? Zeroes, mainly. Scale. More giving, more fun.
When I paid off my student loans, I threw a party with my friends. But I also celebrated by taking my Mom to Europe, where she hadn’t been since she was a teenager. We went to Big Ben, the Eiffel Tower, all the great tourist spots, and I’ll never forget my Mom’s reaction to seeing all of them. It was so fun.
If you can’t give a lot of money away right now, that’s okay. But perhaps you can think of what you would do if you had that money. What would you buy? What would you give? To whom or what would you give it? A cruise with your whole family? A donation to your local food bank, or Planned Parenthood? Starting a foundation to help make land use patterns more pedestrian friendly? The choices are all yours.
Know your reasons
Building up money for money’s sake is a waste of time. In the long run, as they waggishly say, we’re all dead.
So it’s important to get in touch with your “why”, the “why” that drives you to build wealth. If you don’t have that, then don’t bother.
But if you know your reasons, then work with all of the motivation, conviction, and urgency that you can muster. You’ve got a lot to look forward to.