Finance, like many other things these days, is a subject that people often make more complicated than it is. If you listen to the typical Wall street investor, they will use terms so technical that you'd think you were in a math class. Those of us who even passively read about finance will often hear of terms such as CDOs, M3, inflation, fundamental analysis, hedge funds, compound interest, and a bunch of other terms which are alien to our common understanding.



In the end however, the fact of the matter is that having an advanced understanding of these things is irrelevant when it comes to the goal of saving money and building wealth.

I think it could be argued that we have more misconceptions about money than about any other concept in the world. Having read many books on business and finance, I'm often amazed by the things I hear people say when talking to them about money. Most people believe that becoming rich involves having skill, beauty, or some other talent, while others even think that becoming rich requires you to rip other people off.

Here in the U.S., because our public schools don't bother to teach students about the importance of finance, many of them grow up being ignorant of the subject. Of all the subjects you could be ignorant of in this world, money should definitely not be one of them.

What is Wealth?

No matter what financial "experts" or investors try to tell you, the truth of the matter is that becoming wealthy lies within the individual more than anything else. Skill, beauty, and talent are not what truly makes a person wealthy.

But before I elaborate on this, I think I should start by defining the word “wealth." Many people are confused as to what "wealth" really is, and to be quite frank, if you don't know what wealth is, it is unlikely that you will ever become wealthy. The word "wealth" is defined as "owning labor, or owning anything which labor was required to create."

This means that a truly wealthy person will be the owner of things that someone had to labor for in order to create, or labor itself. If you run a company that has 100 employees, you own the labor of those 100 employees, and this would be a true form of wealth. If you have $100,000 worth of gold or silver coins, this is another true form of "wealth." I repeat, wealth is either labor, or anything which was produced by labor.

This brings us to an interesting conclusion. Because our society currently uses paper money and credit in exchange for goods and services, it brings to question whether or not we're truly wealthy as a society.

Think about it for a minute. If the definition of wealth is "labor," or anything which labor produces, then this would mean that our paper money, which was printed by the Fed, and credit, which was keyed into a computer, is not "true" wealth. No one labored for it. No one struggled to get it out of the ground. How can something be valuable when you can simply print it out in large quantities with ease, or key it into a computer?