Values, Prices and Riches

One of the greatest ambitions of most people seems to be the desire to be rich. We want to have enough money to buy ourselves a good life, be happy and not have to endure the drudgery of a 9-5 living. But what is being rich, anyway? When does one start being rich and how does one stay that way?

After giving this some thought, the way I see it is like this. Riches aren’t about having a specific sum of money. You don’t get rich by winning the lottery or by selling your expensive house and moving into a small apartment. None of those sources of money are sustainable. Riches are rather about putting yourself into a situation where you’re constantly living below your means while not having to worry about unexpected costs.

A truly rich person will not have to worry about sudden medical bills or repair costs because he or she will have money set aside in case such an event happens. The rich person will not be spending the extra money every month on down payments, expensive clothes, jewelry or cars. After all, the $19 pair of jeans and the $15 sweater will cover you up just as well as the $500 branded suit. The $9 wristwatch will tell the time just as well as the $1400 one on the ad with George Clooney. Also – buy it in cash; don’t spend money you don’t have yet. I learned that lesson the hard way.

Riches also come from putting your money in perspective, seeing things in terms of their value rather than their price. If a can of Coke costs 10 units of currency and a book costs 200; you can see how they relate to each other. Will twenty cans of Coke or the book give you more value for your money? I’m not arguing that Coke is bad – quite the contrary, I’m still a heavy Coke drinker! – but once you’re done with the 20 cans, they’re over. They are no longer giving you any value. You can’t even sell them to regain some of your costs. The book, however, can be re-read, lent to friends, placed in a bookshelf, sold to others and even gain value if it turns out to be rare at some point in the future.

Once you start to look at things this way, you’ll quickly find that you’re spending money on things when you would be better off spending it elsewhere. Putting so much of your salary on consumables (expensive food, drinks, cigarettes, parties, alcohol, etc) might be a lot of fun while you’re at it but won’t really add any considerable value to your life.

Try it out; write down a couple of things you’ve bought the past couple of days or weeks and see how they compare to each other. See if you can’t figure out a value to currency conversion table for yourself, something like “Ten dollars of price should give me the same value of entertainment/joy/self-improvement as doing activity X”. Later on, if you’re wondering whether or not to buy an energy drink for two dollars, ask yourself if five energy drinks would give the same value as doing activity X which you’ve set as a baseline.