The 10$ bill story – what is the value of money

I was listening a few days ago to Tim Ferriss’s podcast.  He was interviewing Seth Godin, I don’t remember exactly on what subject, but Seth told an interesting premise about the value of money.

If a man would come to you, in a bus station, with a note of 10$ (or euro for that matter) and would tell you that he would sell you that note for 1$, what would you do? The story that Seth told was a little bit longer that this and I think the point was another, but this got me thinking.

If someone sells a note of 10$ for 1$ what’s the real value of that note. Is it still 10$ or it is now 1$? At the same time, what is the value of that 1$ bill? Is it still 1$ or it’s 10$? Because we exchanged 10$ for 1$ one of them either increased in value or decreased. But all of this, it’s just economical theory. Because what really matter, it’s what value the owner of that bill attribute to it.

Let’s say the guy that sold the 10$ bill is named John. John is a millionaire. He has a net worth of 20 million dollars and an annual income of one million dollars. He just wanted to make an experiment and sold a 10$ bill for one dollar. For John, 10$ isn’t much. He can make that much money in a couple of minutes.

Now let’s take a look over Jack. The guy that buys the 10$. Jack doesn’t have that much money. In fact, Jack is unemployed. He was on his way to a job interview when John approached him. For Jack, those 10$ means that he could eat today a nice lunch. This is why he was happy to give up 1$ and get 10$ in exchange.

Who got the better of this transaction? Well, both of them actually. Because if they didn’t get any value from it, they wouldn’t have done it in the first place.

Money is an abstract concept. Most of us don’t realise this. Money is a story. Most of the time, money doesn’t matter. What matters is the stuff we can exchange with it. Money is represented by the food it could buy,  the clothes we could buy with it, the rent for the house we stay in. Money, just by itself doesn’t mean anything. But it has value compared with the goods we could buy.

This is how money was invented in the first place. We created money to ease the transactions between us. Money is a concept, a convention you could say, that increased the trust and communication between people.

Money have value only when compared to the goods we could exchange them with.

In reality, we don’t really care that much about money. We think we do, but what we really care about it’s what money could buy. We want that car, that house, that new blouse. We want the experience.

We all have a story that money could tell. And that makes us emotional when talking about money.  Because the stories that we tell ourselves makes us emotional.

My story regarding money is about freedom. For me, money represents freedom. The freedom to do whatever I want and not be bound by anyone. Having money represents that I could spend all day on the things that matter to me. Working on projects that I really care about. I could spend my time writing and creating new things.

That is my story about money. And because of this I would trade 1$ for 10$ if the possibility would arrive.

What’s your story?

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