Roar, page 15
To sum this up, there are two philosophical extremes, two sharp and opposite points that prevent us from imagining that following our desires is a way to generate income. On the one hand, there are those who refuse to turn what they love into a source of income, and on the other, those who refuse to try because they can’t afford to stop producing income.
Thousands think that wealth is bad, and even hate it and those who have it. Let me show you what you despise: the ideological representation of the wealthy and all that goes with it.
While I agree that the idea of portraying that person as a scoundrel is appealing to most, this characterization is often misguided—in fact, it can be vague and basic. The world has stigmatized a role mostly constructed by the opinions of those who never managed to become wealthy.
I DON’T CHASE MONEY BECAUSE IT SEEMS TOO SLOW FOR MY SPEED.
This perspective is rooted in the culture of Latin American countries. This doesn’t mean we’re like this—there are notable examples to the contrary—but it is a common social tendency among us when comparing ourselves to people from other cultures.
We plunge into adulthood soaked in a downpour of technical and theoretical confusions that complicate our approach to wealth. We have a lousy relationship with our personal finances due to the fact that educational systems allocate marginal, almost nonexistent resources to subjects that have to do with the possession, management, and multiplication of resources. Even at universities, there’s a fairly widespread view of money as something associated with vices and represented by wealthy people with strong negative values. From popular sayings to daily soap operas, there is an insistence on portraying the rich as reprehensible figures. Although we live in a society full of corruption, abuse, authoritarianism, and inequality, cases in which the possession of resources is due to one of these reasons alone will always be the exception.
Although it is very pronounced among our peoples, this perspective is not exclusive to Latin America. The Anglo-Saxon world repeats these patterns. From the earliest literature to TV series, and from children’s stories to comic books, the great villains are rich, lonely, selfish, and bitter people. We could fill the book with characters who fit these attributes. From Lex Luthor to Cruella de Vil, there are many villains who share, among their main traits, the practically unlimited possession of resources.
We need to examine this mindset to see what makes it so strong, what its essential concepts and beliefs are, and why it’s so prevalent among us. To begin with, this notion helps us justify what we have not achieved. What’s more, if we insist on associating poverty with virtue, we will have gone a step further: “poor, but honest,” as if honesty could kneel before a comma, as if we could not be “prosperous and honest.” We’ve been taught to value poverty more than humility, vivaciousness more than ingenuity. Our leaders insist that being rich is bad, but it was never bad for them. We see the abundance but not the effort. We’ve been told it’s good to save, but we’ve never been invited to invest. Politicians have said that salaries paid by companies are bad, but they put up a thousand obstacles for us to become entrepreneurs.
Life won’t care about your reasons, but about your facts. Using false modesty hidden behind a double standard as an excuse is unacceptable. Let’s say you have a million dollars in your head, but you don’t know how to transfer it to your pocket. The formulas have changed and will continue to change, but it’s time to stop hiding behind your circumstances.
MY DOUBTS FIT IN MY TORN POCKET.
Money is one of the fruits of our labor. Whether it’s bad or good depends on how you obtain it, but above all, on how you use it. It should always be a means, never an end. That’s why convictions should never be for sale. I think it is likely that many of those who “hate money” probably hide behind that hatred the frustration of not knowing how to produce income in such a competitive, mutant, and voracious world. Those who criticize the sins of abundance are the first ones who would enter hell to enjoy them.
Just as there are those who despise money as a toxic entity, there are those who consider it a virtue in itself. This is another negative extreme, which ends up putting money above people. It’s as harmful as the previous one when it comes to being productive. This is important because these ideas lead us to honestly believe that wealth is the consequence of a superior, almost ontological quality, and not the result of creativity, initiative, and a lot of effort, regardless of the fact that some start in the basement and others on the rooftop. The problem is that when a low-income person believes in this prejudiced view of society, they surrender to the belief that there are no alternatives. But being poor is a design, not a condition. These classist concepts try to instill in our minds that there’s a predestination, that effort is not enough to get ahead. And when push comes to shove, this almost celestial vision of wealth ends up being just as damaging as associating money with exploitation and deception.
MAKING MONEY IS AN ART FORM
I believe that the right mindset is essential for a person to prosper financially. Again, it’s impossible to get out of poverty without models that reconcile us with money. That’s why it would be of great help to have an educational system that reconciled money with willpower and constant dedication.
I say this knowing that we live on a continent marked by profound inequalities. Coming from the most privileged segments of society offers advantages in loan acquisitions, educational systems, and family independence. Nevertheless, for all social sectors, having an efficient, accessible, and adequate education is essential for future challenges, allowing us to pave the way for those who follow us. In this case we come back to the issue of what we learn and practice. For example, it’s very common to hear that Latinos have lower savings rates than other regions, but we don’t know how to properly define savings. We continue to believe that it means having our assets in a bank or under a mattress.
I’VE NEVER SEEN ANYONE MAKE A LOT BY RISKING LITTLE.
Most countries in North America and Latin America have experienced hyperinflation, and savings have lost their conventional meaning, yet we still haven’t been able to redefine that term. In The Psychology of Money (2020), Morgan Housel describes some of the keys that shape our understanding of money. One is that our experiences shape our particular perspectives on how finance works.
The same author argues that even education can’t help us fully re-create the experiences of other societies—maybe that’s why we’re so willing to make the same mistakes—yet, undoubtedly, as we become aware of the existence of resources, we increase our capacity to act. Unfortunately, our high school graduates leave school without even having heard the words investment, dividend, and profitability.
All these elements end up digging a ditch that makes it more complicated to reconcile ourselves with the images of prosperity. And when you roar, and your efforts begin to bear fruit, there will also be those who criticize you for what you have. The bloodthirsty attacks of those who do not accept your progress will come from every direction. I stopped paying attention to them when I realized how interested they were in how much I have and how little they cared about how hard I had worked to get it. I’ve been working for thirty years, twenty years of that before social media exploded onto the scene.
Let’s get one thing straight: working is one thing, but there is a world of difference between that and knowing how to work. Making money is an art form, because it requires the use of creativity in an effective and productive way, being orderly and disciplined, being punctual and forever passionate, building a life in which work and family merge and coexist in synergy, knowing how to communicate and express oneself, knowing how to spend and invest, knowing how to hire and lead. To produce something, all of these art forms must merge and become one line.
Working shouldn’t be a merit but a joy. And making money should be considered an art form when done ethically. Never be ashamed of having money. We’ve been raised to feel bad about our accomplishments, about the grace and blessing we have achieved by being diligent, skillful, and tenacious.
When you reach your peak, many will say that it was handed to you or that it was sheer luck, that you were born with a silver spoon in your mouth, that you had more opportunities than others, that you stole, or that you cheated. They’ll make public claims because they don’t know how hard you worked in private, how much you’ve given for everything you have. Many will play the victim and that’s why they’ll never be leaders, because a leader who acts like a victim can’t lead themselves or anyone else. So while others cry and point fingers at you, keep on harvesting and shattering those wine presses. Being held accountable by God will be enough.
I LOOK MORE LIKE WHAT YOU DON’T SEE THAN WHAT YOU IMAGINE.
Earn all the money you want honestly and enjoy it. Relish it in the fragility of life, but above all, share it with others. Be prudent, devoid of greed. Invest a little, save a little, but never save yourself from experiencing moments. Spend without wasting your life. Save what you have in your pocket, but not what is in your heart. Never spare kisses, hugs, or good deeds. Never spare words of love.
Our relationship with money is not restricted to the amounts we deposit or withdraw from the bank. Money is much more complex than an exchange rate. If we were guided solely by the monetary denomination of money, we’d lose the sense of its value. This was already explained by the Spanish poet Antonio Machado when he wrote: “Only a fool thinks price and value are the same.”
The latter is crucial when we add up how much we invest in the different steps that lead us to our goals. In human thinking, it’s natural to be dominated by numbers. We unconsciously open a mental account for each type of expense, and in that account, we accumulate what we’ve invested. I will explain this mental accounting with the help of one of the most interesting behavioral studies I have ever read.
To put it in context: Money is supposed to be a “universal” exchange mechanism, which is why we value two products of the same price equally. According to this principle, with fifty dollars I can buy an earring or a good imported steak; I can also use that money to go to a soccer game or to the opera. So we could be led to think that the currency’s value is preserved if things cost the same. In other words, losing a twenty-dollar bill should hurt just as much as ruining a tie of the same price.
On the other hand, the brain keeps a different record from our accounting books. It defines in advance what the money has been spent on and adds up all the amounts we have allocated for that purpose.
MENTAL ACCOUNTING
What we just discussed isn’t only a theory. The marvelous duo of human research, the brilliant Daniel Kahneman and Amos Tversky, put this idea into practice by coming up with a brilliant experiment. They asked a group of students to imagine themselves in the following scenario: They had bought a ten-dollar ticket to a play. The researchers asked them to pretend that when they arrived at the theater door, they realized they had lost the ticket. The researchers then asked if they’d be willing to buy another ticket to see the play. Most participants said no.
The members of a second group were asked a different question: They were presented with the situation of going to a play where the ticket cost ten dollars, but in this case, they hadn’t bought the ticket yet. But they had money in their pocket to do so. This group was asked to imagine that when they arrived at the box office, they noticed that they’d lost ten dollars of the total they had in their pocket, just like the previous group had lost the ticket. They were then asked the same question: Would they buy the ticket, even though they had lost the amount of money equal to the value of the ticket? The vast majority answered yes.
YOUR LIGHT IS IN YOU, NOT IN SOMEONE ELSE’S SHADOW.
In this hypothetical reality, the first group lost a ticket valued at ten dollars, and when they realized this, they chose to go home. The second group lost ten dollars that they had kept in their pocket, and still chose to see the play.
What explains these contradictory results? In the first case, they didn’t enter the theater because their brain had already put ten dollars in the mental account for that event. In other words, they’d already paid for the play, and it would cost them twice as much if they bought another ticket. In the case of the second group, who lost plain old money, the brain lost the same amount in monetary terms, but the money hadn’t been recorded in their mental accounts. So the play still cost ten dollars, but the lost money was not part of any personal calculation.
This illustrated how human beings mentally assign numerical criteria to certain activities.
Although, from a financial perspective, we should value two products of the same price equally, our brains register them differently. We anticipate what we’re going to spend the money on and establish a range of what we’re willing to deposit into that account.
We can use this human thinking trait to our advantage and turn it into an opportunity to focus on future benefits. How? First, identify those future benefits you want to access, such as taking a trip with your family, taking a specific class, or buying something worth a lot of money. Once you determine the goal you’re going to save for, you should begin to set aside a certain amount of money for this goal on a monthly basis. Many bank accounts today have a savings fund option where you can set aside money for a specific goal. For example, if you automate this and deposit twenty-five dollars into that fund each month, after four months you’ll have saved one hundred dollars almost without even realizing it, because that amount is already mentally associated with a specific purpose.
Our brain registers and assigns different values in each case. This has great importance in how we make decisions, because by mentally allocating where resources go, we end up giving weight to what we contribute. The lost ticket was in an established mental account, the lost money was not related to any specific expense, but in theory both had the same value.
Why is this information important to roaring? Defining the right mental line items helps us create a more appropriate destination for our money. Additionally, if you manage to link it to your purpose, you’ll have better results because you’ll strengthen that connection. From a purely financial perspective, this approach has gained traction with the successful Profit First method popularized by entrepreneur Mike Michalowicz.3 The idea behind that model is to allocate part of a business’s return as profit and to separate other relevant expenses as structurally as possible.
Keeping this mental accounting can be very useful if we know what to do with it. Savings is a good example of this. In 2011, campaigns were launched to promote savings among workers in impoverished agricultural areas in Asia. At first, resources were focused on providing them with information that showed the benefits of financial planning, but there were no significant changes.
WHAT WE IGNORE IN OURSELVES IS WHAT WE ATTACK WITHOUT MEASURE OR SCRUPLE IN OTHERS.
Despite the courses and offers that the workers received, the campaigns on the value of savings didn’t cause any shifts in their financial habits. They received their salaries and spent them, leaving nothing for savings. This changed when it was suggested that workers receive their pay in two envelopes: one with the recommended savings percentage and the other with the rest of their salary. Nothing stopped them from spending the money; they were paper envelopes. The workers could easily open both envelopes and waste the money, but a significant group of them set that small amount aside for savings. What changed? This method activated the mental accounts that were intended for savings.
After this exercise, the savings promoters delivered the final punch: Inside the envelope with the savings, they inserted a photograph of the workers’ children or other family members. This strategy reinforced the intention to save by directly linking the action with the benefit.
To apply this experiment to your life, the key is to develop the internal discipline to create the accounts that interest you: finish your graduate degree, publish your book, start that business. Before we move on, to be clear, when I talk about saving, I’m referring to a variety of options: We can save in currencies, investments, inventory, and other ways to protect and increase our money’s value.
Regardless of your income level, set aside one or more accounts for your personal purposes. I’m not talking about mental records. I’m talking about creating real accounts that allow you to separate current expenses from your projects. Of course, in doing so, you’ll limit your other resources. This will force you to take a closer look at your accounting and determine where you need to make adjustments.
Think of this exercise as the marshmallow of money: You can either choose to eat it now or make a sacrifice to invest those resources in what you so desire.
Now I’d like you to reflect on your personal stance regarding money. Do you feel you have a healthy relationship with money? Do you think you’ve prepared yourself to make money, beyond your professional training? What values do you communicate to your children about money? Do you think poverty is caused by external factors or is a result of individual decisions?
As we’ve seen, although we all want to improve our income, not all of us have an ideal relationship with money. That’s why we must get used to doing the mental accounting that will allow us to have a better idea of what we have. We must also make an essential adjustment in our emotional accounts and how we relate to people. Just as we keep these records and organize our money, we also need to keep track of our affections and who occupies each place in the game.
Let go of the people who keep you tied to the past. Do it if you want to know what gifts the future holds for you. Today’s self must know that tomorrow’s self won’t need them. These people can manipulate you and try to convince you that without them you won’t get anywhere.
Blessed are the shores we reach after a shipwreck.
