Money is a tool

Money is a tool

Money is nothing more then a tool. At first blush you would not think this is a profound statements, but it is. Even tho you have just read this statement when it really hits you, it will be a revelation. That is because you will be able separate feelings, and anxieties, from your money decisions.

Most people associate money with their worth, of what others think about them. They mix up how they feel about their job, by how much they get paid for doing that job. They think about the value of other people by how much they money make, or how much money they contribute. They value money for what it can buy them, and how they feel about that is how they feel about money. They worry about money or teh lack there of, they fight over money and so on. Yet they do not have a household budget or a plan for making or spending the very thing that consumes so much of their time and energy.

Money is a tool which, when properly used, provides for you the necessities of life and a standard of living based on your ability to aquire it. That is it, nothing more.
Any thing else you attribute to money is a value you gave it, for what ever selfish reason your mine conjured up. Sounds awful doesn't it.

I think we can agree that a pencil is a tool. Quite useful actually. So think of all the things you can do with a pencil? Now what if a trained artist picks up your pencil, now what can you imagine can be done with that pencil? Maybe a writer picks up that pencil, or a CPA or God forbid the IRS auditor. Maybe your congressman gets the pencil or someone else intending to do you harm. Is it a pencil or a tool with unlimited potential.

Money is a tool you must learn how to use, it is worthy of the time you need to put into learning to use money for it's highest and best use, to make your life what ever you want it to be. Thinking rich is doing just that.

If you where lucky, you where born into a family who understood the basic economic concepts and they assisted you in getting the necessary education and life skills to make a living. Again if you are lucky, you didn't get into to big a financial mess before you figured it out. From there you have to learn budgeting, management, investing, risk management and self control. I know, these are business concepts but it is your life's business.

Some things not to do.

Do not argue about money, a total waste of time, time that can be better spent making more money to fix the underlying problem.

Do not associate with people who continually undermine your money plans.

Do not spend more then you can afford.

Do not lend money you can not afford to donate.

Do not get emotional about a money issue, when you do you can not think rationally to solve the issue that caused the emotions to spike. Look at the problem not the symptoms.

Some things to do.

Have a money plan, I know, easier said then done. Do it anyway, on paper preferably, call it a budget and a future money plan if you will. By the time you have done your tenth draft, it will start to make sense. Your money plan will be constantly evolving. You can almost always trace people's money problems to a failure to plan, and implement the plan.

Fill out a financial statement once a year, it is a good road map that will improve your money management skills over the years.

Work towards getting multiple sources of income. It is amazing how much freedom having money coming in from several sources gives you. For example; Money coming from employment, from other household earners, from rents, from investments, from notes receivable, from odd jobs, from garage sales, from a part time business, and so on. Every rich person I know has multiple sources of income.

Always be looking for ways to increase your household income. That is what thinking rich is about. Improving your standard of living.

Protect your assets by planing for negative possibilities. You can not insure against every contingency but reasonable planning should be done. Basic health insurance, fire and hazard, liability and death are all insurable. Other types on insurance that might wreck varying degrees of havoc with the best laid plans are a matter of choice and should be considered within a cost benefit analysis.

Keep in mind that money is but a tool. When you reach a point where you can say “It's just money, I can always earn more”, you will quit worrying and you will be thinking rich. After all “Life liberty and the pursuit of happiness” are by far more important.