Thursday, January 01, 2015

Work For Flow

Money isn't actually a thing. It may be helpful to think of it as a language (money talks) or a catalyst. But not a thing. When the world was small and understandable, the duties of safety, shelter, food and entertainment could be easily understood and divided up. Barter allowed you to get what you wanted in exchange for something you could give. What money allowed was for things to become more abstract. It also enabled you to do more. Instead of exchanging things of equal value and then stopping. If you could produce more, you did. You could be paid more than you needed, and store that up for later. In and of itself, money was then not anything other than the ability to release potential. To allow people to work. When I left school, I wanted to be an architect (combining maths and art) or a teacher (I figured this allows you to do everything). Money had always been something of a headache for me. The idealistic 18 year old in me wanted to be driven by passion, not controlled by anyone. After a two years between school and university, I came to the conclusion that if you didn't learn how money worked and make it work for you, you would have no choice but to work for it. Working for something that isn't actually anything. I smelt a trap.

  
Two books and an audio course for those looking to understand money and finance

So, I studied Business Science. Within that, I studied Actuarial Science, with the intention of providing a base for more creative endeavours. Understanding money proved more difficult than I expected. Everyone seems to disagree. It seems to be more religious than scientific where people believe they have figured it out, but struggle to provide proof. The 'proof' is normally people having done well. The problem is that sometimes people don't know why they have done well. They say they do and have justifications, but separating out the noise is incredibly hard. Doing something well, knowing why, and being able to articulate that are very different things. I carried on trying, and studied financial planning, and financial analysis. I found studying real businesses more easy to understand than studying investment theories. Still things are complicated.

Because the world is complicated with lots of moving bits, money and finance more broadly allows things to be broken down into little pieces. It allows us to become very good at one of those little pieces. As long as the world wants or needs that piece, we will be paid to continue to get better at doing it. If we are the best, we will be able to carry on doing more. This is where money gets cunning. The very best are incentivised to carry on working well beyond what they can consume. People get frustrated with the very rich having so much. There is a difference between earning a lot, having a lot, and consuming a lot. You can only eat so much. An iphone is an iphone. A bed is a bed. A book doesn't care how wealthy you are. Ask Will Hunting. Money allows people to work to grow an abstract number. To grow their potential ability to spend well beyond what they can actually spend. They aren't consuming this. It is being invested back into companies and responding to consumption of others. Money becomes a philosophical concept.

After a recent long day of philosophical chatting with a friend, we decided it was time to play ping pong. Our heads were swimming. I feel a little like that about thinking about money. Sometimes it is time to just simplify things. To me money is an employee. I want to understand what it is doing. I want it to work hard. I want it to work productively. I want it to work for me. Money is a useless boss that doesn't always treat you very well. The aim shouldn't be retirement, it should be independence. Saving enough, so that gradually your money can earn the money you were earning. It should be the point where when asked the question, 'What do you do for money?', you can answer, 'Nothing, money works for me. I work for flow.'
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