3 Reasons Why Having More Money Will Not Solve Your Problems

Money. That is what most people in the middle class dream about. Very often, when people are asked what they want in life, they wish that they just have more money, and then they continue by saying that all their problems would go away.

That cannot be further from the truth. Having more money sure is a nice feeling, but I would argue that the feeling is temporary and most certainly does not solve all our problems. Here are 3 reasons why:

1. Can You Handle The Money?

What would you do if you were given RM1 million today? Most people would go on a shopping spree. Some would go traveling. Smarter ones would spend part of it, and then invest part of it. Many people dream about being rich, but never really gave much thought to how they would handle the money if they were truly turned out to be rich. 

I would argue that it is precisely because of this reason that those people are not rich right now. Their brains and hearts have are simply not ready to handle the money. Here is a real life example. A 10 million pound lottery winner attempted to commit suicide twice because his life was spiraling out of control. He was simply not equipped to handle the luxuries that so much money can bring him. 

A few years ago, I attended a seminar that talked about our "money thermostat". Everyone has their internal money thermostat. Just as thermostats controls the temperature of the room, our money thermostat controls the our wealth. The idea is that, if our money thermostat indicates that we are only ready to handle RM500,000. Even if we were given RM10 million today, eventually, we will end up with RM500,000 because our brain and heart is only equipped to handle RM500,000.

Here are other examples of footballers who bit off more than they could chew. Their rise to fame was not accompanied by their ability to handle it, and their lifestyles spun out of control and once they found that their money was not quite what it used to be, their lives became unbearable and they could no longer return to their previous living standards. 

2. Propensity to consume

So how does the "money thermostat" work? Economic theory suggests that consumers tend to have a general propensity to consume. That is to say that most people tend to spend a proportion of their income. So, as earnings/wealth increases, their earnings tend to increase proportionately as well. 

The challenge that most people have is that they are unable to control the urge to spend their sudden increase in wealth. Even if they do not spend it all at one go, just by knowing that they have a little extra in the bank, they have a tendency to increase their spending matters ever so slightly, "just to reward themselves" a little bit. This increased spending will gradually deplete their gain in wealth over time if they do not find a way to sustain their wealth. This brings us to the 3rd reason.

3. Can this "success" be repeated?

If your rise to fortune was more fortuitous than through skill, it is unlikely that the success can be repeated. Therein lies the danger. This is precisely what happens to lottery winners. They get a large windfall, but have no real ability to repeat that success, except to continue trying their luck at lottery, or worse, at larger gambling habits, believing that they are "lucky" enough. 

If you are lucky enough to be one of those people who win the lottery, the first thing you need to do is to invest in building the ability to handle that kind of money. If you choose not to, then at least, find someone capable that you can trust to manage that money for you. If you do not have the ability to repeat the success of making that much money, it is quite likely that your wealth will not be sustainable. Once you have depleted it, it becomes very unlikely for you to get back to that wealthy state. 

So WHAT CAN WE DO?

It is all well and good to sit around and criticize wealth and money. If money is not able to solve all our problems, then what should we do instead? Here are 3 essential techniques that you need to build and manage wealth:

1. Focus on Your Purpose

You need to find your core purpose in life. Your reason for being. This is of utmost importance because it gives you a reason to HAVE money. This will help guide your spending patterns. If you do not have a clear purpose, you will likely squander your newfound wealth. 

But if you have a purpose for having money, it is likely that you will channel your funds towards that effort. For some people, it could be their children or family members. They may save it for their children's education. They may save it for their parents' retirement. Or start a Charity Organization. Whatever it is, you must have your purpose for having money. Only with purpose can you make your wealth worthwhile. 

2. Focus on Adding Value

But having a purpose alone is not enough. It will not be enough to sustain your wealth. We still need wealth-sustaining techniques. I also strongly believe that a person's wealth is directly related to their ability to deliver value to others. 

For example, a doctor can heal illnesses. Doctors keep people alive. That is why they get paid so much. The value they add is in preserving life. Don't focus on making more money. That usually never ends well. Focus on adding value. 

Give people so much value that they have no choice but to pay you. Share your wisdom with them. Share your skills with them. Eventually, you will get your money's worth. One of my favorite quotes comes from the movie "3 Idiots":

"Pursue excellence and success will chase you, pants down."

The move depicts two friends who are searching for their long lost companion. They revisit their college days and recall the memories of their friend who inspired them to think differently, even as the rest of the world called them "idiots". I will let you enjoy the movie without any spoilers!

3. Can You Communicate Your Value?

The rest of the world may call this "sales" or "marketing". But the truth is, there is no point in being able to add value if you are unable to communicate it to the rest of the world. For example, even if you have the cure for cancer but do not inform the world, there is no way the cure can be put to good use. 

Apart from focusing on the technical skills required to generate value for others, you also need to develop the relevant communication skills to share your value. On our own, perhaps we can share with 10 or 20 or even 100 people. Imagine if we are able to generate value RM10,000 in value for 100 people. Then we are worth about RM1 million (RM10,000 x 100). But if we learn how to communicate the fact that we can generate RM10,000 in value for people to about 1,000 people, our value would immediately rise up to RM10,000 x 1000 (or RM10 million). 

Our wealth is a product of the value we can generate and the number of people we can communicate this value to. It is imperative that we pay attention not only on the technical skills to generate value, but also on the ability to sell/market our skills to the relevant audience.