Redefine Your Relationship With Money: Why Its Keeping You Poor

Money wields an unparalleled influence that permeates every nook and cranny of our planet. With the power to elevate mighty nations and reduce them to ruins, it plays a pivotal role in shaping our history.

In the annals of time, the earliest manifestation of currency was rooted in barter systems. People exchanged livestock or goods for their essential needs, marking the rudimentary beginnings of this financial journey.

It wasn’t until around 650 to 600 B.C. that the concept of formal currency took root. Emerging in the regions of Lydia and Ionia, elites employed stamped silver and gold to compensate their armies.

Subsequently, Rome enters the stage, showcasing a vivid example of currency manipulation and debasement. The Roman currency’s decline unfolded gradually, especially with their silver denarius.

This devaluation was driven by the Roman government’s deliberate alterations to coin size and silver content. By the3rd century, the silver denarius had been so significantly debased that it contained scarcely any silver.

Consequently, the Roman economy succumbed to the ravages of hyperinflation, rampant inflation, and rendered their currency worthless.

It is essential to grasp that money itself possesses no inherent value. Its worth hinges solely on collective belief and universal acceptance.

Every day, trillions of dollars course through the global economy. Yet the intricacies of how money truly operates often elude most. Let’s embark on a journey to redefine our relationship with money and harness its potential to our advantage.

Your Relationship With Money

Money is a tricky thing. There’s no one-size-fits-all way to think about it. It can affect how you feel about your own finances and how you see others’ financial choices.

Here’s the deal: We need to recognize that people of different generations, brought up by parents with varying incomes, values, and in different economic situations, all learn different money lessons.

These lessons get passed down through the generations because it’s what people know, and they share what they know. That’s why we often hear that “the rich get richer, and the poor get poorer.”

So, what’s the key difference between the rich, the poor, and the truly wealthy? Being rich means having a lot of money, but if you don’t know how to handle that money wisely, you can quickly find yourself in the “poor” category.

Let me share a story about two very different individuals, one society labels as poor and the other as rich.

The story about a janitor

Let me introduce you to Ronald James Read. Until the day he passed away, his name was virtually unknown. To those who did know him, his life seemed rather unremarkable.

For a quarter of a century, he worked as a car mechanic at a gas station, and then he spent another 17 years sweeping floors at JCPenney. At the age of 38, he bought a modest two-bedroom house for $12,000, and he lived there for the rest of his days. Ronald was widowed at 50 and chose not to remarry. His friends recalled, as a hobby he enjoyed chopping firewood.

In 2014, at the impressive age of 92, Ronald Read left this world. His passing garnered international attention because of an astonishing fact: Out of the 2.9 million Americans who passed away in 2014, fewer than 4,000 had a net worth exceeding $8 million. Ronald Read was one of those few.

In his will, Ronald bequeathed $2 million to his stepchildren and generously donated over $6 million to his local hospital and library. Many, including those who were closest to him, were left in disbelief. Where had he accumulated such wealth?

There were no inheritances, lottery wins, or risky bets in his story. Ronald Read simply saved what he could and invested it wisely in blue-chip stocks. He patiently watched his investments grow over decades, ultimately amassing a fortune of $8 million.

The Man Who Had All The Money He Needed

Meet Richard Fuscone, an accomplished finance executive at Merrill Lynch with a Harvard education and an MBA. He retired at the age of 40 after an illustrious career. In many ways, he was the opposite of Ronald Read. But, just like Ronald, Fuscone found himself making headlines a few months before Read’s passing.

During the mid-2000s, Fuscone took on substantial debt to expand his already sizable home in Greenwich, Connecticut. Surprisingly, his mansion with 11 bathrooms, two elevators, two pools, and seven garages, which cost him a staggering $90,000 per month, didn’t seem large enough.

Then came the infamous 2008 financial crisis, which dealt a devastating blow to Fuscone. His highly leveraged assets and lack of liquidity led him to reportedly tell a bankruptcy judge in 2008, “I currently have no income.”

Just five months ago Ronald Read left his fortune to charity, while Fuscone had to sell his home at foreclosure for a whopping 75% less than what the insurance company had estimated its worth to be.

The Lesson From This

Life always offers us lessons, whether we choose to learn from them or not. Striking the right balance between being thrifty and wasteful is crucial. In the cases of both Ronald Read and Richard Fuscone, there is no absolute right or wrong way to manage finances.

Ronald Read lived a modest and unpretentious life, accumulating a substantial fortune that he never really spent. On the other hand, Fuscone amassed great wealth only to have it slip through his fingers due to his excessive desires.

What both of these individuals teach us is that money doesn’t discriminate based on who you are. It’s your relationship with money that ultimately decides whether it stays with you or slips away.

Money Is A Tool

It’s vital to grasp that money plays a significant role in our lives, and it’s something we all have to deal with, whether we like it or not.

People handle money in various ways – some save diligently, others spend prudently, and some take risks, while others invest wisely. Each choice sets a different course for your financial journey.

Yet, here’s the crux of the matter: Money remains an unproductive asset unless it’s put to use. Saving alone won’t make you wealthy because inflation erodes its purchasing power over time.

Banks understand the value of money. They take your deposits and lend them to borrowers, profiting from the difference between what they pay you in interest and what they charge borrowers. So, while your money loses value due to inflation, the banks make even more money with your funds.

If this irks you and you decide you don’t want to make the banks richer, that’s commendable. But if you spend all your money on material things that bring you joy, you’re not in a better position.

There are individuals who strike a balance between saving and spending, but it requires discipline and a commitment to start a consistent investment plan.

Investing means making your money work for you, rather than you working solely for money. Imagine a day when your investments replace your work income, granting you the freedom to choose how you want to live your life.

There’s no greater joy in the world than having the freedom to make choices.

Money is a tool; choose wisely how you wield it.

Key Takeaways

• Money does not discriminate based on who you are. It’s your relationship with money that ultimately decides your financial outcome.
• Invest your money into productive assets that will eventually replace your work income.
• Strike a balance between saving, spending and investing. Life is too short to deprive yourself of the fun things, but long enough that you do not want to outlive your money.

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