Rat race, lets talk about it. In 2011, celebrated Hollywood actor and film star Johnny Depp faced financial troubles, declaring bankruptcy, with a staggering 100 million dollars in debt, despite amassing over 650 million dollars throughout his acting career.
This situation raises a pertinent question about the nature of money. Many of our actions and motivations are driven by an underlying desire, or need to accumulate wealth.
The critical issue appears to be our capacity to effectively manage, and handle it.
Many Americans are dealing with the highest levels of student loan debt ever.
To put it simply, lots of people haven’t learned how to manage money wisely.
Debt is like an invisible burden, especially for those who are financially vulnerable.
These challenges aren’t unique to one place; they affect people in different regions.
Take a moment to think about how you see money in your life. Does it come and go quickly?
Have you ever been in a tough money situation, that made you consider get-rich-quick schemes, or listen to someone claiming they have the secret to wealth?.
I talk about these issues, and the importance of personal finance on my channel, I know that how we think about money is often more important, than how much we have.
Ask yourself, does it really matter if you make a lot of money each year, if by the end of the year, you have nothing to show for it?
Where is the problem? Rat Race
It’s crucial that we figure this out, and more importantly, find a better way to understand the role of money in our lives.
Part 1. What is Money?.
Money, in simple terms, is like a tool we use when we buy things or get paid for our work.
It’s often seen as a way to trade goods or services. But here’s another way to think about it: money is like a way of showing value.
When you spend money on something, it’s because you believe it’s worth the same as the money you’re giving.
Sometimes the price isn’t set by you but by the market.
This idea is important because we often give money a moral meaning. You might have heard the saying, “Money is the root of all evil.”
When we see someone with a lot of money, we might think they got lucky or wonder who they took advantage of to get there.
We rarely think about the value they created to earn that money.
Understanding that money is just a way of showing value helps us see that money itself isn’t necessarily bad, and having it doesn’t make a person bad.
While there are scammers who may try to sell things that aren’t valuable, that reflects their morals more than anything else.
Money simply gives you options, and what you choose to do with it depends on your own values.
Now, knowing money is about value, what’s next? How does this help someone struggling with paycheck-to-paycheck living or drowning in credit card debt?
Just knowing that money equals value doesn’t change much.
It might change how you see money, but what’s really important is understanding your relationship with money. How do you view and handle it in your life?
Part 2. Production vs Consumption.
Money comes into your life and leaves, showing the relationship between your income, and expenses.
Another way to understand this is through your production, earning money versus your consumption, spending money.
Typically, money enters your life when you’ve produced value, often through labor or a job.
It leaves when you’ve consumed something, like a Netflix subscription or a new car.
Net worth can reflect how well you balance consumption and production.
Now, think about your own finances.
How much of the money that has come into your life do you still possess, or have you invested.
So, consider whether improvements are required in the consumption or production aspects of your relationship with money.
Often, the problem lies in consumption.
For example, a study found that 78% of American workers were living paycheck to paycheck, even among those earning $100,000 or more a year.
This suggests that fixing consumption habits is crucial.
Even if you earn a high income, spending it all can be a problem, as seen with wealthy celebrities, who faced bankruptcy.
So, it’s important to address consumption issues, before focusing on production.
Part 3. The Money Trap | Rat Race
The Money Trap explores the concept of the rat race, which is like an endless and often pointless pursuit.
Some people use this term to criticize traditional nine-to-five jobs and sell programs or books.
However, this overlooks those who are content with their jobs or have different aspirations.
The real rat race is living on the financial edge, always one paycheck away from being broke. Unexpected events like job loss or health issues can throw finances into turmoil, creating mental strain.
The solution lies in drawing awareness to your relationship with money. Journaling monthly expenses helps understand yourself as a consumer.
Overcoming the “ostrich effect” is crucial, where people avoid negative financial information.
Taking control involves budgeting, deciding on monthly spending and living below your means.
Before investing, building an emergency fund, holding three to six months’ worth of expenses, is common in personal finance.
Living below your means counters cognitive biases like hyperbolic discounting and social proof, where short-term rewards, and societal pressures affect financial decisions.
The phrase “keeping up with the Joneses” reflects the consumption problem, driven by a desire for social approval, it how people get trapped in the rat race.
In today’s world, social media exacerbates this, as people measure self-worth by online approval. This video doesn’t condemn buying expensive items, but aims to highlight the impact of materialistic views without philosophizing about it.
This is about understanding yourself as a consumer. Do you care more about looking rich, or actually being financially stable.
The “rat race” isn’t just a nine-to-five job; it’s living on the edge, constantly chasing the next paycheck or material possession.
This lifestyle often puts your bigger life goals on hold. Having a budget and tracking expenses, can help break free from this cycle.
While talking about making money is exciting, it loses its purpose if your consumer habits lead to financial struggles, and that is the real rat race.
Now, let’s shift gears and discuss ways to make money.
Part 4. Unleashing Your Productive Potential.
The realm of production is an art in itself, requiring a blend of skills, creativity, and an acute understanding of market dynamics.
In my journey, I harnessed a diverse skill set encompassing acting, presenting, storytelling, and video editing to craft engaging and informative videos.
The reception from the market has been encouraging, affirming the value I’ve brought to the table.
Production manifests in various forms. It might be, the development of an innovative app or software addressing a market need, the establishment of a fitness brand, excelling in branding, and community engagement, or the conventional 9-5 job, that serves as the means of production for many.
However, the scope of production extends beyond the confines of traditional employment.
Identifying yourself as a producer involves, recognizing avenues through which you can contribute substantial value to the market, with the potential for significant financial returns on a larger scale.
The advent of the internet has, ushered in a plethora of opportunities for individuals to create, and disseminate their products to a global audience. Yet, the true litmus test lies in the market’s response to what you offer.
The realization of whether your creation fulfills a market need, becomes evident only upon its release.
In essence, the production journey is a twofold process.
Firstly, it necessitates self-awareness as a consumer. Delve into an introspective examination of your consumption habits by maintaining a journal, deciphering the why behind your purchases.
Also, establishing a budget serves as a vital tool to manage, and regulate your consumption, fostering financial discipline.
Secondly, the transition to the role of a producer, involves maximizing the value you bring to society. This can manifest through traditional employment, entrepreneurship, or any other avenue of production.
The overarching goal is to contribute meaningfully, thereby positioning oneself for financial success on a grand scale.
This framework, rooted in conscientious consumption, and purposeful production, has not only guided my journey, but has also proven instrumental for countless others, with a vested interest in financial prosperity.
Final Thoughts.
As you reflect on the significance of embracing a conscious consumer approach, and nurturing a heightened self-awareness concerning your purchasing habits. recognize the transformative potential this holds for a more intentional and purposeful life.
By diligently journaling your consumption patterns, and imposing budgetary constraints, you empower yourself to seize control of your financial decisions, fostering a profound sense of mindfulness, and authority over your economic choices.
This newfound awareness extends beyond the realm of personal finance, seamlessly transitioning into the sphere of production.
Whether through employment, entrepreneurship, or other avenues of contribution, the focus shifts towards maximizing the value you bring to society.
Embracing this holistic framework, centered on mindful consumption, and purposeful production, not only proves advantageous for your personal financial growth, but also stands as a guiding principle for individuals like yourself, navigating a journey marked by meaning and impact.
As you celebrate your own milestones and successes, may this conscious approach continue to serve as a steadfast companion, on your quest for a purpose-driven and fulfilling life.