Money is simply defined as a medium of exchange of goods and services. This definition is very important in that it underscores the primary reason for money – to facilitate exchange. If people have this basic understanding, a lot of the money problems we have will be non-existent. It goes without saying that whoever needs money should think of the goods or services s/he can bring to the marketplace.
Before the advent of money, people traded by barter. Then, if you needed anything, the first hurdle to cross was to look for someone who has what you need. When you had found that person, you must be sure the person needs what you have in exchange for what you need. After finding a perfect match, you then had to deal with the proper measure of items to be exchanged such that there was equity and fairness. The above scenario enables us appreciate the challenges money has resolved for us.
Types of demand for money
There are basically three types of demand for money: transaction demand, precautionary demand and speculative demand. The transaction demand derives from your demand for things money can buy for your regular upkeep – food, clothing, communication, transportation, education, etc. This demand type exerts the greatest pressure on your money needs. Unfortunately, this is where most people get caught up, never able to go beyond. In fact, the demand is so much that a lot of people can’t meet it. Some resort to borrowing to keep up with transaction demand.
Precautionary demand for money arises from the need to take care of unforeseen circumstances. A typical expense item that falls in this category is premium on insurance policies. In the event of a loss, insurance is meant to restore you to the position you were before the occurrence of the insured event. Basic insurance policies include: vehicle, medical, house, business premises, life, amongst others. There are many others which are specialized in nature. For instance, a singer can insure against the risk of losing his or her voice before the performance at a major event.
Speculative demand for money, as the name implies, is the need for money to engage in a venture that the outcome is not determinable with certainty from the outset. People engage in speculative money demand because of the reward that could accrue if things go well. Your need for money to invest in a business is speculative because of the risk of losing the funds invested.
The rich people get richer because they have the resources to engage in the three types of demand for money whereas people of modest means can hardly meet their transaction demand for money.
Why is money important?
Talking about the importance of money, the famed motivational speaker, Zig Ziglar, said, “In the hierarchy of human needs, money ranks high up with oxygen.” There’s probably no better way of articulating the importance of money. To live without money has asphyxiating effect on humans. It’s impossible to meet your basic needs (food, clothing and shelter) strictly on self-effort. You can do without money only to the extent that you can personally provide your own food, clothing and housing! The mere thought of all the processes involved is overwhelming not to talk of actually engaging in them.
One thing is certain; anyone that is strong and courageous to attempt producing one-tenth of his needs himself is bound to die prematurely. That’s why when you don’t have money you feel your life has come to a halt. It’s so because your needs don’t understand when you don’t have money. What happens to a man who has no money is best described by the Scriptural passage that says: “Your needs will come suddenly like an armed bandit.” It’s not uncommon to see a poor man being aggressive and angry even when he is unprovoked. The driving force of that aggression and anger is his needs.
How to make money
The answer to how to make money is found in what money is required for – to meet your needs. So to make money, search out the things you can do to meet the needs of others and do them. When you serve the needs of other, money comes to you without fail. So when someone says he has no money, what he’s saying in effect is that he’s useless to everyone. I am yet to see anyone who is useless in life. Anyone that holds the view that s/he can’t be of use to anyone is just a lazy person and the only cure for laziness is hunger. “A man that will not work should not eat” is what the Scripture says. If the plethora of a man’s needs does not force him to work, nothing else will.
Man is a spirit being; he has a soul and lives in a body. These three components of a human being define the areas anyone desirous of meeting other people’s needs can focus on. You can either meet the needs of the human body, soul or spirit. The three basic needs of food, clothing and shelter are the needs of the body.
Education is one of the needs of the human soul. So you may consider setting up an organization that trains people certain skills. A friend of mine recently started teaching Year 6 pupils public speaking, you can’t imagine the response he’s getting. Entertainment is another need of the human soul. We are all living witnesses to enormous financial resources at the disposal of entertainers.
Lastly, you can set up a business that attends to the needs human spirit. Though some people don’t like the way it sounds, however, setting up religious organizations that attend to the needs of the human spirit is a way of making money. This is to the extent that the ‘promoter’ is able to meet his basic needs there from. Like everything else, make sure it’s your calling. Otherwise, you will be frustrated.
The key to finding what you can do to make money is to do a thorough assessment of your skills set and strength. Once you can identify the need(s) you can meet based on your strength, go to work on it. While at it, make persistent and perseverance your companion and you will succeed. The Scripture says, “Whatever your hands find to do, do it with all your might.”
Are there things that are more important than money?
Three things you shouldn’t compromise in your drive to make money are: your relationships, your health and the person you’re becoming. On relationships, first, you mustn’t sacrifice your relationship with God for money. The second is your relationship with significant individuals in your life: spouse, children and friends. While the first relationship type requires no detailed explanation, many people fall short when it comes to nurturing the second relationship type. The main reason you should nurture your relationship with the significant individuals in your life is because whereas you can always make more money, when the relationship with your spouse, children and friends is messed up, it’s usually difficult to put right.
Your health is equally more important than money. In fact, it’s probably your most important asset. Without it, the desire to make money is non-existent. The saying, “Health is wealth” is golden. People say when a man loses his health, he has lost everything. So the message is that you must not engage in any activities that put your health at risk. I’ve lost a couple of friends and acquaintances to ill health in the last 12 months that I am worried about what goes on in the larger society.
Last among the things that are more important than money is the person you become. Since what you have – money, houses, cars and other assets – are only a product of who you are, it goes without saying that who you become is more important that what you have. Mr. Jim Rohn said, “Beware of who you become in pursuit of what you want.” The reason is that you may end up becoming the person you don’t like after you must have made all the money you wanted. That was the case with the Biblical character called Judas Iscariot. Judas betrayed his master – Jesus – for thirty shekels of silver (good money at the time) but he hanged himself thereafter. Why did he do that? Well, he was unhappy, not with the money but with himself (the person he became).
Like any other forms of capital, the essence of money is to enable us to get things done. However, your relationships, health and the person you become are more important that money because they enable you get things done even when you don’t have money. In fact, if you must pay your way to get all things done, you are probably one of the poorest people around. The real measure of your wealth is the ability to get certain important things done without necessarily paying for them.
Will Money Make You Happy?
People say money won’t make you happy. Unfortunately, this saying hasn’t deterred many from unwholesome quest for money. Usually, most people’s response to the saying is: “I am not happy without it. Let me make the money first and I will find out whether I’ll be happy or not.” It’s better said that, like all tangible things, money is subject to the law of diminishing marginal utility (satisfaction) meaning the satisfaction you derive from making incremental sums of money reduces. This is especially so if the initial sum of money meets your basic needs; the rest is just more money, nothing more.
The psychologist Frederick Herzberg called money a “hygiene factor”. Money, he said, is a motivator up to a certain point, after which it reduces in importance. You need a minimum amount of money so that you don’t have to worry about money. If you have below the minimum threshold, you think about money and nothing else. Above the threshold, you then start thinking of other important issues like family, relationship, health, etc. In effect, to sustain the initial satisfaction you derived from making money, the source of your satisfaction / happiness must shift to something more important.
To make money, you must make value creation your focus. When you create value for people on a continuous and sustainable basis, you will eventually make the money you need. To imagine making money without creating value is destructive thinking. Anything you do that brings you money without you adding value to anyone is a scam. Beyond the fact that scams don’t last, scammers end up destroying themselves.
Related post: http://waleadeniranye.com/capital-and-the-life-of-balance
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