Money vs Value: Rich People Have Big Libraries, Poor People Have Big TVs

The reason that money comes and goes is that we focus far too much on getting money and using money and DO NOT focus on creating and getting value.

What in the world does that mean? Well, perhaps the best way to explain that is to give you some concrete examples. Get comfy, this is going to be deep and wide.

When we focus on getting money, we are looking at money as a means to an end. We need <x> money to do <whatever>. Because we have that relationship with money, we seek ways to get more MONEY so that we can BUY or DO more things. In other words, we view money as a thing we get, and spend. Thus, we do exactly that. Most of the things we buy have only short term value to us, some no value at all. For example, an iPad may be a fantastic tool, but is quickly outdated and soon that investment has become worth nothing.

In other words, when we focus on getting money – we kill the goose that lays the golden eggs to eat it, rather than letting it continue to produce golden eggs.

However, when we focus on buying and creating value it’s a totally different thing. It’s also the key distinction between wealth and poverty. Wealthy people, at least those who have built it from scratch and consistently, have focused on creating value to the point that they literally posses a goose that lays golden eggs. Usually that goose is a fat investment account or a business that they’ve built, in both cases, over time.

So here’s the thing. We ALL spend a LOT of time on earning money so we can use it for something.

Very rarely, if ever do we really think about what we’re using that money for. Are we buying things that will be used up and eventually gone? Or are we buying ASSETS, things of VALUE that either appreciate or produce income for us? For the most part, most of us spend most of our time working on things that generate money, not enduring value.

What are TRUE Assets? Anything which on their own generate other resources (time,money) and preferably grow in value over time.

• Businesses (not self employment), shares of stock, bonds, promisory notes, etc
• Intellectual property (books, tapes, cds, movies, and thousands of other kinds of IP)
• Rental real estate
• Land
• Education*

Things you’ve been told are assets but are not really (by my definition):

• Your primary residence (typically an expense and terrible investment)
• Cars
• Furniture
• Cash (it depreciates over time)
• Any self-employment or job (because if you stop working, they will not produce an income tyically)

So think about VALUE as purchasing or creating TRUE ASSETS. For example, I have a book which I wrote 10 years ago for the automotive industry that still sells today and produces an income even though I haven’t done much with in 10 years. I did the work once, and now it generates cash which I can convert into more assets, or simply spend it. Another example is renting a room in your home, that’s a way to transform what is normally not an asset (your primary residence) into more of a true asset, in other words, you get paid by IT (the house, technically the renter) each month.

Education is on the list of true assets because unlike all other things you can spend money on, it can NEVER be taken from you. Education also tends to generate gains in both time (by tapping into other people’s knowledge/experienece) AND money (in savings/gains). Investing in classes and coaching for example can give you life experience and skills that can help you now and forever into the future. Learning solid money management skills for example is an evergreen investment in yourself – you’re always going to have to use and work with money throughout your life, why not understand exactlyhow it works and how to get the most out of it?

I spend a lot of time and money on books and training because one of the things I’ve realized is that I can significantly reduce my learning curve by simply tapping into other people’s experiences and brains. I always get a huge return on my investment in those kinds of things and I’m always ready to learn something else.

There’s a GREAT saying that I really like (I believe it comes from Zig Ziglar originally, but I heard it first from Dan Kennedy):

Rich people have big libraries, poor people have big TVs.

The coolest thing about creating value, is that anyone can do it and the costs are usually just time (but can involve money too). Everyone has experiences and knowledge that is valuable to other people. The even cooler thing is by creating that value, you can get as much and have as much money as you’d like while feeling REALLY GOOD about what you do, because you’re adding enormous value ot other people’s lives and getting a little money in exchange. Want to MAKE or HAVE a lot of money? Well, time to start thinking about how to create some serious value and deliver that to as many people as possible.