Money vs Wealth - What's the difference and why is it important?
Many people think that money and wealth are the same thing. Or that wealth just means having a lot of money. In my opinion they are two very different things.
What is money?
Money is a value that is assigned to products or services. The dictionary defines money as: "a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively."
Many, many years ago people would barter for services or items that they needed or wanted. Once money was invented the barter system has faded away.
Now we are moving to electronic transfer of funds via apps on our cell phones. The physical currency is disappearing.
Just because you have a lot of money does not mean that you are wealthy. What I mean by this is that you also may have a lot of debit which then offsets the money that you have. Expenses tend to go up proportionally to the amount of money earned.
What are the 7 levels of earning?
Most people do some sort of work/labor in order to earn money. A certain amount of money is needed in order to purchase things like food and other comodities. People exchange time for money. According to Ian Stanley there are 7 levels of earning and they are:
1. Paid for your Time - This is when you are an hourly or salaried employee. You put in 8 hours of work and you are paid for 8 hours of work. This category is the most common.
2. Paid to Do Things - I would say that this applies to contract work. You get paid xx amount of money to complete xx job. (You think it might take xx amount of hours to complete.) So if you are able to do the job in less time then that would be essentially more money per hour spent.
3. Paid to Manage - Fewer people fall into this category. This is where you are paid to manage the people who are actually exchanging their time for money. These people are the CEOs of companies and they are paid quite a bit more than those who are being paid for their time or paid to do things.
4. Paid to Think - This is more of a consulting situation. You may be hired to go into a company and evaluate what is going on. You would tell them what they need to do to change things and they would do it or carry it out. You as the consultant are not actually doing the work youself.
5. Paid to Imagine - Being paid to imagine is one of the highest paying things that you can do. Ian Stanley uses Steve Jobs as an example. Steve might say just imagine having 10,000 songs in your pocket now go do it. He didn't actually do the work but had a team to do it for him. He was the idea guy. Elon Musk would be another example of an idea guy.
6. Paid More Money for Money - Being paid more money for money is when you have the ability to give money to someone or a team and say: "Now go make me more money."
7. Paid to Breathe - This is the highest level. These are people who are being paid just because they exist. You might be willing to pay John Smith (fake name) xx amount of dollars just to be at your party. This is an example of John Smith being paid to breathe.
What is wealth?
I think at its core wealth is the ability to be paid to be yourself. What could be more rewarding than that? You could actually be at any one of the the levels of earning and if you are doing what you love, you are haivng fun and you are able to be yourself...that is true wealth.
Others have defined wealth as the ability to maintain your lifestyle even if you lost the ability to have an active income from your work. Having money does not make you wealthy. Money should be seen as a tool and form of exchange not as a determining factor for happiness or wealth.
I recently came across an article in Forbes that defines what it means to be wealthy.
I think this is important because no matter what level of earning you are at you can be wealthy. There are a lot of people making a lot of money but they are not happy because they are not being themselves. They are presenting a facade to the world. Personally, I consider wealth to be more an emotional state. On the flip side of that there can be someone who is being authenically themselves but they may not have alot of money and yet they consider themselves to be wealthy.
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