All of us were passed down some form of the American dream, but achieving the things on our lists wonât always make us happy. Oftentimes, what we really want is financial security.
Money is part of everyday lives and flows through our socioeconomic system. Wealth is about having stake in the financial infrastructure by supporting what already exists, creating new value channels or making the system better as a whole.
Choose your own adventure â invest in what works today, create what could be better, and/or rearchitect what wealth looks like.
When I was growing up, my parents never talked about wealth â it was always about money.
They were focused on paying the bills and putting food on the table. They didnât have the time or energy to sit down, and just think about âwhat wealth meansâ like I have the privilege of doing today. All they had was a dream.
The American Dream
It was the dream all our parents passed down to us at one point or another. They told us that even though succeeding was hard, success was just a matter of following a few simple steps:
Graduate college â
Get a âgoodâ job â
Buy a house â
Live happily ever after đ
In essence, itâs the reason we call ourselves âfirst-generation college graduatesâ to begin with. This dream was our guiding light and, at least for me, a big part of why I am where I am today.
But itâs far from perfect. College challenges our ideals when we realize just how much we donât know and now, two years out of college myself, I can attest to the fact that even getting that good job or buying a house doesnât always make us happy.
đgraduating is an awesome accomplishment, but where do we go next? source
Now What?
Over the coming weeks, I want to kick off the Pillars of Wealth by talking about financial security__ â __the peace of mind that weâre often looking for when we think about wealth (spoiler alert: it was never really about the money).
For todayâs issue, weâll start with understanding how money works and why we need to differentiate it from wealth in order to obtain financial security.
Building Wealth đ¸
Having money is pretty transparent â we can just check our wallets or pull out our phones and log into our bank accounts â but wealth is harder to see. Itâs systemic, cultural and a reflection of our financial infrastructure.
In actuality, wealth is about consistently influencing money flows.
Money Flows
Money is part of our everyday lives. We earn it from our jobs, spend it on the things we want and save some of it to spend later.
In this sense, moneyâs value is clear (we give X dollars in exchange for Y) and transient, (once we give it in exchange for something else, itâs value to us is gone).
In other words, every financial decision sets off a chain reaction of socioeconomic activity where money inevitably leaves our immediate control and becomes subject to the invisible forces of our existing financial infrastructure.
Wealth is about having stake in this financial infrastructure â whether thatâs in the form of financially supporting what already exists, creating new value channels that others can benefit from or doing the work thatâs necessary to make the system better as a whole.
Wealth Influences The Current
If the ebb and flow of money is like water, then building wealth is analogous to its current â shaping the volume and direction of money throughout our socioeconomic system.
The way I see it, there are three broad paths we can take to turn our money into wealth that are all equally valuable and depend on each other:
Invest in what works today:Â Whether you want to support your community or just get a piece of the profit pie yourself, every financial decision is your chance to influence the money flow (no matter how slight). Like the plumbing that guides the running water in our homes, existing financial organizations are rigid, but effective.
Create what could be better: We can create what we know will be valuable â i.e. start something people are willing to pay for. If we notice the plumbing is broken, we can take the high-risk, high-reward path and try fixing it ourselves. Itâll be messy, but some of us will just prefer to create these things ourselves and, if it works, we gain wealth from capitalizing on an opportunity to create.
Rearchitect what wealth looks like: Now, there comes a time when the system itself is part of the problem â and thatâs to be expected! Our financial system is far from perfect, but itâs important to remember that people are ultimately what legitimize value. If new systems are imagined, created, and adopted by everyone else, then those who were there to lay the groundwork of these new systems2 would be, by definition, wealthy.
So as to not go on a separate tangent here, Iâll unpack these a little more in a later issue.
Next Steps đ ď¸
Our system is, without a doubt, an imperfect one, but change starts small. Below is a shortlist of resources that Iâve found particularly helpful in my journey so far; I hope they prove useful to you too:
Practical Resources
Betterment: Investing on auto-pilot â Betterment is a ârobo-advisorâ that I personally use to regularly invest in things like my Roth IRA.
Robinhood: The technology-first investment platform â Robinhood helped ease me into the world of investing in stocks and I consider it an essential (and easy) tool for every newbie.
Coinbase: Crypto is the future, but damn is it complicated â Coinbase may not be a perfect final destination for cryptocurrency investing, but itâs the best first step into this new world.
Further Reading
Wealth, shown to scale: An incredible visualization of wealth that not only provides countless research-driven insights about the concentration of wealth, but does so in a way that speaks volumes.
Chamath Palihapitiya on Money: One of my favorite talks on the topic of money and wealth. Chamath Palihapitiya speaks to how we can understand money as an instrument of change and Silicon Valleyâs failure to cultivate meaningful value.
Business Models Arenât Just For Business: Why donât we talk about business models outside of the workplace? If you want to sustainably__Â __help the people you care about, you need to figure out how youâre going to systematically deliver value to them. Thatâs what a business model is for.
Moving Forward âĄď¸
While the American dream is both inspiring and comforting, itsâs also limiting to those of us that are may not quite fit within each checkbox. Maybe weâre struggling through our college classes, still figuring out what career we want to pursue or arenât ready to settle down and buy a house.
Building wealth is about more than just having money. We use money within a living, breathing financial system where people are the ones that decide whatâs valuable and wealth comes from being intentional with our money and facilitating how value is created and re-distributed.
Reframing our rigid set of goals into a flexible understanding of financial security will serve as a bridge between generational ideals around success â and I hope youâll join me on that journey.
Coming Up
Choose Your Own Adventure:Â the different ways to build wealth
When Have We âMade Itâ:Â the limits of delayed gratification
Having a Flexible Roadmap:Â creating a personal financial system
The Meritocracy Trap: why hard work alone isnât always enough
Wealthy But Guilty:Â a short note on ethical wealth creation
đgraduating is an awesome accomplishment, but where do we go next? source
đwhat money looks like when it makes sense
đbut things gets complicated pretty quicklyâŚ
