If someone asked you to define what money is, what would you tell them?
There’s the dictionary definition. Money is “a current medium of exchange in the form of coins and banknotes.” It’s the cash in your pocket. It’s the stuff that makes your debit card work at the grocery store. And it’s the stuff you think you’ll have tomorrow when you swipe your credit card somewhere.
Maybe it’s what you work for. If it weren’t for that, you could stay home every day with no worries. Or you could work wherever you wanted. You’d have no everlasting ties to any employer. But since you need money to pay your bills, put food on the table, and hopefully fund your retirement, you work.
You might think it’s something elusive. Every payday it seems to take flight like it has wings. If it burns a hole in your pocket, you’ve got to get it out quick. When you have it, you feel powerful. When it’s gone, you feel lost and alone.
All these views have something in common.
As crazy as it may sound, money is what we perceive it to be.
Our perceptions arise from what we believe. For example, you probably believe the sun will rise tomorrow. So you go to sleep at a reasonable hour so you can get up early, get yourself ready, and hit the road. You do that because you believe that so long as the sun rises every weekday, you’ll need to face a new day.
So what if someone told you the sun wouldn’t rise tomorrow? You’d reject that statement out of hand as the raving of a lunatic. You know beyond the shadow of a doubt that the sun will rise. It’s done it every day of your life so far. So there’s no way under heaven it won’t tomorrow.
When you truly believe something to be true, no one can convince you it’s false.
Whatever you think money is, is what it is for you.
Money – those coins and banknotes – has value because we give them value. Since we all believe that, it’s true, isn’t it?
All this sounds pretty subjective. It is, because we shape our definition of money by our experience with it. Next time we’ll look at the one thing money really is.