What’s the nature of money? How does money reflect your priorities and understanding of abstract concepts?
According to Thou Shall Prosper by Daniel Lapin, money is a reflection of you: Everything from your possessions to your time, creativity, and energy can be measured in monetary value. For instance, when you go to work, you’re selling your time and energy in exchange for money.
Continue reading to learn more about the true value of money.
Understand the Nature of Money
What is the nature of money and how do you come to understand it? Lapin says you should develop a healthy respect, and even love, for your money in order to understand its true nature. However, don’t love your money because of what you can buy with it, but rather because it represents the value that you’ve contributed to the world.
(Shortform note: Lapin believes your wealth is a measurement of how much value you’ve added to the world, but that assumes earnings are an accurate reflection of productivity. The Economic Policy Institute (EPI) has reported that may no longer be the case. In fact, at least for the average American (the focus of the EPI’s research), productivity has increased 3.5 times faster than pay over the last 40 years. Workers are generating more value for their employers, but seeing smaller returns on what they produce. This suggests that money earned might not be an accurate way to measure your life or your contributions to the world, as it doesn’t reflect the true value or impact of your labor.)
Furthermore, when you view wealth as a reflection of yourself—instead of just as numbers on a bank statement, or as a goal that you’re supposed to chase—you’ll make more careful decisions regarding your finances and your business.
| Your Money Is Your “Skin In the Game” Why would viewing your wealth as a reflection of yourself make you a better businessperson? Arguably, it’s because when you equate your wealth with your worth, your business dealings involve more personal risk. If you make bad decisions that decrease your business’s monetary value (and thus your wealth), not only are you losing money, but you’re also losing self-worth. According to Nassim Nicholas Taleb, taking on personal risk—what he calls having Skin in the Game—is the foundation of any good business strategy. He claims having “skin in the game” will help you in a number of ways: Engagement. People are more focused and work harder when they’ve got something to lose. Experience. Taleb believes that learning through experience (and especially through failure) is more effective than learning through study and reasoning. When people’s failures affect them personally, they’re more likely to take those lessons to heart. Ethics. People are more likely to behave ethically when they know they’ll face personal consequences if they get caught behaving unethically. |
Why Charitable Donations Are Profitable
Lapin says that how you use your money reflects on you just as strongly as how you earn it. In other words: While the money you gain reflects the material value you’ve contributed to the world, the money you spend reflects your principles and your moral character. For example, if you pay your employees well and on time, you’ll earn a reputation for generosity and reliability. Therefore, it’s important to be generous and charitable with your money.
Jewish tradition holds that giving money to charity benefits the giver more than the receiver. First, being generous is a mitzvah (a good deed) meaning that it will benefit you spiritually and help you feel good about yourself.
(Shortform note: To understand the connection between money and spirituality, it’s helpful to know that Judaism places very little emphasis on the concept of an afterlife. Therefore, when Lapin says that a mitzvah will benefit you spiritually, he means it’ll help you live a good life here on Earth, not that it’ll help you get into heaven. That’s also why, as we’ll see later, Lapin believes that earning money can be a spiritual endeavor—he sees money as a reflection of how much you’ve improved the world, so accumulating a lot of wealth means that you’ve performed many good deeds.)
However, counterintuitively, giving money away is also one of the best ways to increase your income. This is because it’s profitable to have a reputation for generosity; people will be more willing to work with you and to support charitable causes by supporting your business. On the other hand, people who cling to their money seem desperate and untrustworthy, so people tend to be uncomfortable doing business with them.
(Shortform note: Some companies view charitable donations as something they can only do when profits are high, as a way to get positive attention and tax write-offs. However, some business and marketing experts support Lapin’s claim that the exact opposite is true: Corporate donations to charity increase sales and profits because customers then do business with you to support good causes. Therefore, giving money away can be the ultimate form of marketing. Conversely, companies that develop reputations for greed tend to lose customers, and therefore profits; for example, the software company Unity lost an enormous number of customers and public support after announcing plans to charge developers a fee when users installed games made using their software.)
