Seeking Wealth, Not Money or Status
Come to think of it, this is just Naval’s Podcast scraped off. Great read nonetheless.
💵 Money ≠ 💰 Wealth
Money is a form of social credit, it's IOU for things you did in the past or promise to do in the future. Cash as we know it is fiat currency i.e. it's not backed by any physical asset a portion of which you can exchange it for from the issuer. It derives its value from the mutual agreement.
✨ Bertram Gilfoyle explains money
"Why do people covet the silly pieces of green cotton paper in their wallets? It’s because we are all sheep. And we’ve mutually agreed to endow certain things we value."
Whereas wealth is mathematically your ability to live off the resources you have and bring in periodically. It's what makes you money when you aren't grinding, it's your ticket to freedom.
Definitions of wealth
Robert Kiyosaki defined wealth as the cumulative value of your (liquefied/liquefiable) assets / your periodic expenses. By this definition, the unit of wealth is time.
Being considered wealthy isn't a specific number, it's more of a ratio. If you're bringing in more than what you're taking away, you're wealthy and the magnitude of wealth increases with the disparity between these 2 numbers.
- There are 2 ways to achieve this, living beyond your means or increasing your income, or maybe a weighted combination of both?
🥇🥈🥉 Status (v/s Wealth)
Status is your placement in the social hierarchy and it makes one of the 2 major games that people can choose to play - the Wealth Game and the Status Game.
Wealth is a positive-sum game, anyone can own a house without stripping anyone off of the ability to own one. It's the creation of things together, the result of which is something new and it aligns well with development and invention.
Status on the contrary is a zero-sum game. To be at the top, there must be someone below you or to be the best, you HAVE to put down the rest. This creates perpetual dissatisfaction and injurious competition among the players and JEE forms a great example, check out Kota Factory S2 E5.
So why play the Status Game at all? Because it forms the basis for the functioning of the society making it a necessary evil. Civilizations need a social hierarchy to maintain order.
Society can function in the absence of wealth, not in the absence of a societal order but that's what the Status Game should be limited to - forming the core systems for smooth functioning because anything beyond that eventually hinders development (hunter-gatherers didn't progress to the farming stage until they discovered storage or wealth. It was a great predictor of survivability in the stone age, not so much anymore).
At a macro scale, the Status Game represents Socialism while the Wealth Game represents Capitalism. The ones creating wealth will always be attacked by the ones putting status first and that's only because that's their game, a worse game - to look the better by putting others down (also highlights some degree of pessimism - a self-fulfilling motive).