What is Money?

Money is something that everyone wants more of. However, only those who fully comprehend the question of what money really is, will know how it comes about and how to get keep it flowing in.

Money, as is printed on the pieces of papers that we have in our wallets are used as a medium for exchange. It is convenient. Imagine each time you go to a store, having to bring with you sheeps and cows in exchange of the goods you need. Which is what our ancestors used to do. Then of course, with the introduction of the gold standard, everything was exchanged with the number of gold ingots you have. Look at those period dramas where people buy food using those gold ingots. One wonder how they managed to take flight with those heavy metals weighing them down.

These days, other forms of currency is being invented. Companies with inflated share prices use them as collatoral or as a form of currency to acquire other companies. Of course, this is something we are all familiar with, with assets like houses, you may walk into a bank and convert that into money.

Now, coming back to the question of what money is, let us look at what we have been using money for. We use it to buy food, to get ourselves a drink, to relax at a beach resort, to purchase an automobile (though most people buy on credit), to acquire properties to live in or to invest, to trade securities, and the list goes on. Well, I take it you get the picture. Whatever we exchanged for with money, it gives us something in return. That 'something' could be to satisfy a hunger, to quench a thirst, to rejuvenate ourselves, to get us places fast, to have a roof over our heads, and so on. Notice all that have been mentioned can be categorised (or generalised) into one single item, and that is value.

The value can be real (in the case of a hunger), perceived (in the case of securities - perceived value), or otherwise. Either case, it does not matter. What matters most is that the person who exchanged his money for that something received something of value to him. We may not agree that an automobile brings about a perceived value of having 'made it', nor may we necessarily disagree that a certain kind of food brings us satisfaction. Therefore, it only means that the person who exchanged his pieces of paper (money) thinks he is receiving something of value in return.

If you think about it, most of the items that we purchase did, in fact, bring us some value. Though sometimes on hindsight it may have been an oversight, nonetheless, at that point of transaction, we believed we have gotten something of value to us, be it a tangible good or an intangible service. Hence, money is nothing but value. And the more money we have the more value we can add to our lives. Who doesn't want to be treated to the finest food or being served in the most priviledged of terms? So, here's the thing.

If we want more money, so that we can add value to our lives (be it getting the fastest car, living in the biggest house, eating the finest food, or giving it away to some needy cause), we must be able to be of value to others. If you are the top salesman through and through, you bring value to your employer by increasing his sales. If you are a consultant who is able to solve problems for your clients, you add value by enhancing their operations. If you are a chef, and your creations are unique and delicious, you add value to the restaurant by getting people to come back for more. Therefore, if you want to have more money, first you must be of value to others. And the amount of value you have will determine the amount of money you'll get. Though, there may be some who are able to reap huge profits for little value, that will not sustain.

Given this, does it shatter the believe that some have about, you need to have money to make more money? Absolutely. When any entrepreneur first start out, they may have little money. But with their ability to fulfill the needs of others by adding value, they will be able to make more money. What's even more amazing about this observation is that, anyone who is constantly able to not just add value, but is able to increase the level of value everytime will be guaranteed the constant stream of money he earns. Not only that, he will be able to increase his income overtime, not taking into account inflation.

So how does one ensure his ability to increasing add more and more value to the people he serves? That question is answered in the next article on "The CEO library".