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Sunday, March 9, 2014

Reframing Money

Sometimes in life things just don't work the way we expect them to, and we don't understand why.  We either don't get the results we want or think we should get better results.  Maybe we feel we should be making more money, or getting better results in the gym, or any of a myriad of situations we might be unsatisfied with.  Of course, we believe our knowledge and actions are right, but confirmation bias, the tendency to find evidence that supports our beliefs and ignore evidence to the contrary, throws a wrench in any method of proof that we are doing the right thing.  We need to find a way to take a different look at things; we need to reframe our thoughts on the situation to come at the problem from a different direction.  After all, Albert Einstein is credited with the saying, "We cannot solve our problems with the same thinking we used when we created them."

Money problems are one of the more common situations people are facing in this economy.  If you're having trouble making more money, paying off bills, or meeting your budget, maybe you need to reframe your thoughts about money.  Recently I read an interesting posting on Ramit Sethi's Brain Trust about reframing our thoughts about money, and I wanted to share the implications of that way of thinking.  I found the new way of thinking about money very enlightening.  

For many people, their income is simply a set of numbers direct deposited to their checking accounts by the company they work for.  Buying stuff is just a way of adding and subtracting numbers in a ledger.
Now, let's reframe the situation.  Instead of thinking of your income as just money a company gives you to work for it, let's try this:
Your income represents the amount of life energy you expend in creating value for other people in society and business.
Instead of thinking "I work, I get paid", think "I expend my time and life creating value, and what I get in return is what people think my life's effort is worth."  For me, this reframe was extremely enlightening.

If you're like most people, you have probably given very little thought to what you do with the minutes and hours of the day.  Going to work five days a week and getting money in return is just the natural order of things; it's part of the water.  In reality you expend precious time earning this money; time that you can't get back.  This is your life essence. It should be valuable to you, as you only live once.  In return, your income should reflect the importance of that life.

Of course, this frame is not useful to some people.  When I posed it to others, I got all sorts of new age objections to it.  Their concepts of work and value are stuck and not subject to questioning.  If you are willing to question your own beliefs, then join me as I examine the implications of this reframing from my point of view.

New Age Malarkey

The new age malarkey usually revolves around the claim that there are so many things that are valuable that we don't get paid for.  Art and music are not just valuable to society but extremely important.  Charity is valuable and important and defines the quality of our society.

OK, let's explore those points of view.  When was the last time you paid for the privilege of  viewing art?  When was the last time you hired an artist to do a painting for you?  Chances are you haven't visited a museum in a long time, and most people have never contracted for a painting.  Let's face it; if you aren't willing to spend your very own money on it, that is, your life energy, it is not important to you, period.  Sure, you can support government intervention and support of the arts, but that's not your money; that's an aggregation of everybody's money seized by the government.  It's impersonal and requires little effort to talk about the importance of the National Endowment for the Arts, and therefore ultimately of little value to you.  On the other hand, it takes time to volunteer, time and life energy which are limited and valuable.  It also takes some of your valuable time to create an income you can personally share with the NEA, as opposed to money that is extracted from you by the government.

Is the school board cutting the local band due to lack of funds?  Don't complain to the school board; shell out some of your cash if the band is valuable to you.

A Rembrandt painting might go for millions of dollars nowadays, but Rembrandt never got that much in his lifetime.  There's a reason they're called "starving artists"; their work isn't valuable to anybody.  Successful artists throughout history had to find patrons who found the artist's work valuable enough to support the artist.  How many artists do you personally support?

As for charity, there are very few instances where charity is valuable to anybody.  If you toss some coins at the beggar standing next to the road at the intersection with a sign, it's not even valuable to the beggar.  He was willing to do nothing in exchange for the coins.  Is standing with a sign somehow valuable to you or society?  I suspect what is valuable is some smug feeling of superiority, or a salve to your conscience.  You value peace of mind, not the other person's role in society.

Admittedly there are some charitable activities that are valuable.  Some require the active participation of the recipient, and there are some clever micro-loan programs to bootstrap a person's contribution of value to society.  I say kudos to these programs.

Why Are Some People So Rich?

Of course, the malarkey continues when people raise objections over the super-rich and their fabulous wealth.  Some people have so much money it actually bothers other people.  The fact is simple; unless they stole the money, these people have somehow created tremendous value through their lives and are reaping the benefits.

Football, baseball, basketball and soccer players make money because as a society we really do value watching them play sports.  We're willing to work hours and hours to obtain money that we can trade for tickets.  Advertisers are willing to pay large sums to get ads on TV during the games when you can see the ads.  The same applies to actors whose movies we value seeing, or TV shows we watch and the musicians whose music we so readily buy on iTunes or Amazon.  They all create something we value.

More importantly, these people leverage their value by providing it for not one or two people, but literally millions of people.  Your ticket to the movies might only cost $8, but there are millions of people willing to spend that same $8.00.  A popular song on iTunes goes for about $1.29, but millions of people will buy it.

And then there are people like the Kardashian girls.  Some people have parents who created so much value they simply handed it over to their kids.  The kids are living off the value created by their parents.  The Kardashians and their reality show ilk are rich for stupid antics because as a society we're willing to exchange our time for money that we can trade for watching their antics.  As much as I hate to admit it, they do create value for millions of people (what does that say for our society?) but not for me.

Why Are Some People So Poor?

The prior question begs the second question.  You can probably guess my answer.  People are poor because they have not found ways to create value for others.  (Absent, of course, other factors such as predators stealing any value they created.)


Implications for Real People

Let's forget about the new age malarkey, and the rich 1% and reality stars.  What about you and me?  Want a raise?  Simple, contribute more value and make sure your boss knows about it.

Hate your job?  Don't waste your life energy on it.  Find a new one.  Create value in other areas.  Next  leverage your value.  Don't create value for one person, or one company, find some value that you can create for many people or companies at the same time.

Find moral and ethical ways to create value for other people, and not only will they pay you for it, but you can change society itself.  In my opinion, that's no new age malarkey, but common sense.

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