My understanding of money - Cryptocurrency exchange platform

Understanding of so-called wealth. Many people have said before that money is not万能, but without money, you cannot do anything. This statement indeed has some truth.

People often have an overly simplified understanding of money. In fact, money has different meanings at different stages. It can be said that money is life; without money, people may not even be able to eat enough, and may very likely die of hunger. Money is a form of energy, a form of freedom, and to some extent, it also represents power. Everyone’s understanding of these varies.

In specific contexts, money symbolizes something, which is not surprising. Because different scenarios and backgrounds, the role of money also varies, so I say money is nonlinear. Nonlinear means: more money does not necessarily mean more benefits. The same amount of money can have different values; two amounts of the same denomination may have different actual worth. And everyone’s earning ability varies, and so does their wealth, which is normal.

Why is money considered nonlinear? Because the initial few bills, the very first bit of money, are the most important, so it is nonlinear. Why is the initial money “the most”? Because it needs to meet the most basic living needs. For example, clothing, food, housing, transportation, medical treatment, and illness are the most fundamental needs. Without this money, it might be impossible to cure an illness, and life could be lost. Therefore, the money spent—whether tens of thousands or hundreds of thousands—is very important because it relates to basic needs. Hence, the first 100,000 or 200,000 yuan are the most crucial, and the money earned afterward is relatively less important.

But it is also relatively important. What is the money used for later? Later money is for exchange. For example, I need to weed every week. I could buy a lawnmower to do it myself, saving that money, but it would cost me half an hour. If I pay $50 to a worker to do the job, I save half an hour of my own time. This is a form of exchange. We can say money is energy, it is power. Because when you give your money, you have the right to let someone complete the task; you can understand it this way. This is the second level.

The previous level relates to life; the second level, simply put, is a form of energy, a form of exchange. You use your money to exchange for time—your own or others’—or to save yourself half an hour, which indirectly extends your effective lifespan.

Then, the next level is freedom. The money you spend may not be out of necessity or for life, nor for weeding or decorating your home. The third level is a form of自由 consumption. For example, traveling, entertainment. Some wealthy Americans spend money to go to outer space, which is an experience—this is the third level. In fact, this is optional; not having it does not affect your basic quality of life. But some people pursue this freedom; when they have this money, they can pursue these experiences.

Therefore, I believe money is nonlinear, and it also represents different things. We should not assign it only one meaning, as that would be overly simplistic. People are prone to misunderstand money, especially in this regard. The best state is to earn enough money—neither too much nor too little.

Because when you earn more money, it is also a form of exchange; you need to put in effort to earn it. After graduating from university, working nine to five means exchanging your time for money. Frankly, that money is not free; it doesn’t fall from the sky, and it also consumes your time. So in this case, you need to carefully weigh whether this cost is worth it.

Initially, you need to consider the expenses of the first几十万, such as clothing, food, housing, transportation, and medical expenses. These are essential and the most important expenditures. You might think that this twenty万 is very important, willing to spend your life’s time working to earn this money to maintain basic family expenses, ensuring necessities like food, clothing, housing, and transportation. You are willing to exchange your life’s time for this.

At the next level, for tasks like hiring someone to weed or decorate, you need to do calculations. If you hire a worker to weed and he earns 50 yuan in half an hour, then in an hour he can earn 100 yuan. But if your profession can earn 200 yuan an hour, then you probably won’t choose to weed or decorate yourself because it’s not cost-effective. In this case, you shouldn’t use your life’s time to exchange. Because your life is more valuable in terms of time—you can contribute more to society or earn more money. So, as a businessperson, you should hire others.

But don’t forget, earning money always involves costs; how much you earn must consider costs. Most people focus only on making money but overlook their own costs. Therefore, I want to emphasize that all earned money has costs; your time is also precious and should be well utilized. Whether working or starting a business, you need energy, and overworking, overtime, or neglecting health can harm you. Not resting well, dining with clients, drinking—all can affect health.

Moreover, family relationships are also very important. You might spend time that should be used to educate your children and be with your family on business or entrepreneurship. Time has costs. When you bring back a large sum of money, you should know that you have paid costs—these costs might be more important than time or money itself. You are exchanging your family affection, health, energy, etc. These are not always reflected in monetary terms, so everyone must be clear about this.

Now, a question arises: the best outcome is that the money you earn just meets your basic needs for a lifetime. Like Xiao Shenyang said, “People live, but money is gone,” which is a huge pain. You don’t want to be broke when you’re old, in a nursing home, with no money, and people want to kick you out—homelessness is a big problem and a great pain.

Conversely, “Money is still there, but the person has already died,” which is just a regret. Because after you die, maybe others will use your money better, contribute more to society, or your children can use that money to give their children a better education, instead of wasting it frivolously. So I believe that “people die, but money is not spent” is not a big problem.

The main issue now is that I previously mentioned “every piece of money has a cost.” In society, everyone has an average wealth level, similar to an investment, which has a basic return rate. For example, the investment return rate in society is between 7% and 10%. If you want higher returns or more money, you will have to bear many costs. Risks are also a kind of cost—you must sacrifice risk and cost, and make trade-offs between them, just like in life.

If you don’t want to be like the average level in society—say, earning 10 million yuan in a lifetime—if you want to earn 100 million, you will likely need to put in more effort, which means more costs. You need to spend more time, energy, and may sacrifice health and family time. Your relationships with your children and spouse may be affected, at least to some extent. These are all costs. So, you also need to do the calculations.

Are you willing to spend extra costs to pursue wealth beyond the societal average? This is an important question. Many people envy these things; they think they need them, but they are not truly necessary. They believe they need them because they like to drive good cars, live in nice houses, and satisfy desires. Everyone has desires, but some cannot control them—for example, pursuing luxury brands is not a real need. Big houses, luxury cars, designer brands—these are mostly for show.

If you think living for others is more important, and you are willing to sacrifice your life and time to exchange for material things, and if having a big house, a good car, and designer brands is just for showing off, then I think the cost you pay is not worth it. Sacrificing your real life time and health for these things is not worthwhile. So, we should control desires and avoid excessive comparison, because comparing for vanity only increases the cost.

Because once you want to exceed the societal average wealth, the costs grow nonlinearly. Unlike ordinary people, who only need to get a job and earn the normal level of money in society without taking too many risks.

If you start a business, you will likely face many risks and do many things. Some things you shouldn’t do, but do anyway—like risking legal issues or other risks, taking on financial risks, borrowing a lot of money to start a business, which all have the possibility of failure. If you fail, your quality of life, including your family, could be greatly affected. Many people in China are in debt for this reason.

This can be related back to the metaphor of money: the top is basic income, then exchange with others, then freedom, and below that, human desires. The value of money decreases as you go down; the later the stage, the more negative the value. Money has costs; if you get five million but sacrifice ten million or more in costs that cannot be measured—like health, family—then more money can harm you.

Because you sacrifice things that money cannot buy back, I believe money is not better the more you have. That is my understanding of wealth. More money is good, that’s not a problem, but the main point is not to spend too many costs.

One way to get more money with relatively low costs and not much time is to invest—let money generate more money. I have a dedicated episode titled “Why do people invest?” and “How can young people achieve financial freedom?” which discusses how spending time learning and making mistakes when young will pay off in middle age or old age, as money will then show its powerful function: it can generate more money.

You don’t need to use your life (time) to start a business or work overtime to earn money; money can earn itself, so you need to understand investing. Earning one million versus one hundred million yuan uses the same techniques and methods. Basically, it means you can make money while sleeping—that’s the highest level of earning. This greatly reduces the so-called costs.

As long as you learn gradually, when you are young, the mistakes you make may not be significant for your capital. When you grow older, you will realize this. The middle age passes quickly; when you retire, your wealth is substantial, and your experience is the richest. At that time, money snowballs, earning more and more.

Of course, a prerequisite is that you must enjoy doing these things. You should like earning money to invest, find satisfaction in investing, so that both wealth and spirit benefit. Buffett is a typical example; although he is in his eight or ninety years old, he and Munger are very happy. They don’t need to earn more money because they find joy in earning it—they enjoy the process. So I tell young friends, if you like this process, the earlier you let money generate more money, the better, so you won’t pay excessive costs for surplus money.