Money is infinite. There is not a finite amount of money on this earth.
Suppose you had just purchased all the necessary materials to build a house, hired workers to do all the labor, and now find yourself with a fully-built house. Labor and materials have been evenly exchanged for money. The workers have traded their labor for financial compensation, and the materials were also traded for the appropriate amount of money. Nothing has been gained or lost. But, isn’t this house now worth more assembled than the cost of all the materials and labor it took to build it put together? Indeed it is so, for you have just created money.
Now, let’s suppose you worked for 10 hours at a job which pays you $10 per hour. Your employer then gives you a paycheck for $100 minus taxes. So, you made money. But, did you create money? No, you just made an even exchange for it; you traded your labor for an equivalent amount of money.
In the first case, where you built a house, you made money. In the second case, where you worked at a job, you also made money. But in the first case, you made the money by creating it. In the second case, you didn’t create anything.
All too often, people today focus only on making money. They don’t care, or they don’t know to care, about how they make it. But it doesn’t matter how financially ignorant people become, the laws that govern money don’t change. And, the first law of money is: If you want more wealth, you have to create money.
You know you have created money when you have created value. Let’s use the first scenario as an example. Think of the money you created as your reward for providing jobs for all the workers who built your house and for putting all those raw materials to good use.
When you create value, money begins to gravitate towards you. When you obtain money without creating value, it will repel away from you. So, you will find that when you work for money, the money you get will quickly be gone. But when you create it, it will stay with you.
It’s easy to find a job and work for money. It takes substantially more effort to develop the skill of creating value. This article is written for those who are willing to make the effort.
(*money image via Shutterstock)