Remember the movie “Jerry Maguire”?
This post is not about the movie but about money.
I might have done this post yesterday but I got circled and then I circled others and --- I need to post about google+ soon.
But the flow of money is like a circle.
Oh before I get too far, I need to give you a little background. My career was in engineering not economics. Now that you know I’m not an economist or banker, maybe you’ll read on. Oh, I’m not a lawyer either so maybe that’s a plus too.
It’s sorta sad that many professions get such a bad name. But once in awhile a banker gets caught robbing the bank or a lawyer breaks the law. Those stories destroy our trust.
Money is all about trust.
If you don’t think it’s about trust, go read up on “a run on the bank” which often happened before the FDIC was created in 1933. If you don’t like to read, watch “It’s a Wonderful Life” in which a bank run plays a big part in the plot.
I had a lucky introduction to money as a kid. My father had brought me a raffle ticket that won. Not that this thought ever crossed my mind at the time, but I could trust him to pay me the winnings. I would have never known that I won.
My dad enjoyed coming home with the news and handing me $200 in cash. I thought I was a millionaire. I stashed it away in my bedroom drawer. For many days, the first thing I would do after school was count out the money on my bed (maybe that a first sign of OCD?).
After awhile the money counting wore off and I bought a stereo.
Mrs. 4444 was please to let me use the following picture that shows her mom getting a gift of money for a trip. It reminds me of my raffle winning.
|showing you the money - taken by Mrs. 4444|
Cash - Today we don’t even use it as much. Any of you still get your pay in cash? Most of our money is just shown as numbers in an account. Money transactions are numbers moving between accounts. If you need an example, let me know and I will have you deposit some money in my paypal account.
I don’t own a smartphone but I keep hearing about the new technology to allow them to be used as cash. I think it is a dumb idea until these smartphones become tamper proof, but that’s just my opinion.
So take a $20 bill and look at it (hopefully you can get your hands on one).
What makes it different than a $1, $5 or $100? They are printed differently is all. Ok, $100 bill has the most security features because it is the mostly traded one internationally. My point is we collectively trust that this printed piece of quality paper is worth what is written on it. Not much different than a check you could write and send me.
The difference between your $20 check or a $20 bill (I’ll accept either) is who is backing or who is being trusted for its value.
Ok so now we have this currency that we agree to trust. How much will it be worth next week, next year? Now you need to start thinking about inflation, cost of living, interest rates, future value formula, and possibly other things (who is this lisleman I just sent money too?).
Have you traveled to another country? International experiences really open your eyes and minds. Have you exchanged dollars for pounds, euros, loonies or colones? Why does the exchange rate change? - international trust between banks and traders.
For now I’ll just end this with a few of lessons I’ve learned regarding money.
- You don’t really know what an item is worth until it is sold.
- You don’t really save money by buying something for a discounted price. You actually only spend less. Saving is holding on and keeping money.
- You do get what you pay for. Often it may take months to find out what you really got, other times you might find out after the first bite.
- A constant imbalance of more people taking your money than adding to your money exists throughout your life. Life and money are tricky.
Bet Against the American Dream from Alexander Hotz on Vimeo.
Did you find this post interesting? I hope you didn’t expect me to tell you how to make money. I’m very skeptical of get-rich schemes. Most all of them are just trying to get rich by selling you on some program or book. Let me know what you think of the idea of posting about the stock market.