Sunday, January 21, 2007
By: Matthew Doucette
People often incorrectly sense greed in a person who chooses to expand their financial intelligence.
I often recommend books that are mistaken as "get rich" books. One of these books is Think and Grow Rich (Napoleon Hill). It is not hard to see how the 1937 title can be judged too quickly. The book is about thinking and succeeding, and little to do with "getting rich". It does not help that countless multi-level marketing schemes (MLMs) push such great financial books towards their (often very ignorant and greedy) members, who too often miss the point of life and success.
There is great potential for confusion whenever I mention a book that deals with "riches". So, I am going to clarify my intentions, my interests, and my motivations.
Defining "Greed":
I wish to define "greed". Greed is wanting something for nothing. Greed is wanting or expecting something that is not deserved. When combined with ignorance, greed becomes more powerful: Greed is a misunderstanding that something is deserved when it is not.
It is important to differentiate between the blank desire for money versus the desire for money earned. An example: When I mowed lawns as a child for an income, I expected to be paid fairly for my work and this would not qualify as "greed".
"greed: An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth." - Answers.com
"Financial Intelligence":
There are many forms of intelligence. Your financial intelligence, your understanding of finances and money, is only one section of your intellect.
Financial intelligence is not linked to your other forms of intelligence. You can be highly intelligent in other ways and make poor financial decisions everyday. Strong logical and mathematical skills do not indicate strong financial skills. You will only be "good with money" if you make effort to be good with money.
It helps to grasp the concept of a "financial intelligence" if you consider "dealing with money" to be a skill. That's exactly what it is. For most, it is an underdeveloped skill.
An unfortunate property of financial intelligence is overestimation. We tend to think we are good at things we do, and everyone spends money. Too many think they have sufficient practice and experience with money which grant them "expert" status. Considering the amount of financial transactions the average person deals with, it is not hard to see why so many are fooled. Amount of experience is not an indication of skill. Experience with financial transactions does not make financial experts. Perhaps it is arrogance, too, as money is often tied to our egos. It helps feed our egos to think we are masters of the dollar. Whatever the case, the "practice makes perfect" concept does not apply with money. (Off topic, but this is proof that "practice makes perfect" is a faulty concept.) An excellent analogy is driving. Almost anyone who drives thinks they can drive well. This is surely not the case. The same gross overestimation exists with financial intelligence.
Increasing Financial Intelligence Versus Greed:
Increasing your financial intelligence increases the efficiency of your money and the efficiency of your efforts to make money. It is an optimization. It does not mean you are trying to make money at all costs. You can still do what you love and be financially intelligent. Increasing your financial intelligence is not wanting something for nothing. It is not greed.
Furthermore, being financially ignorant does not coincide with selflessness. In fact, it is the opposite. People who are bad with money are usually the most greedy. Such people do not understand what money is and how money works. They are frustrated with their faulty understanding of reality, and incorrectly assume anyone more successful has cheated (via immoral or illegal methods). Failures need to justify their failure by placing the blame elsewhere. It is impossible for them to accept that someone successful has a better understanding of reality than they do. (Recognizing your mistakes, taking responsibility of them, and learning from them is a trait of winners; losers lack this ability.)
Optimization is not greed. Striving for efficiency is not wanting something for nothing. People enjoy justifying their mediocrity by believing success in anything, especially wealth, can only be obtained through greed and luck.
The Moral of the Great "Get Rich" Books:
(Although some of the best "get rich" books deal with more than just money, and explore more significant areas such as passions, I am only speaking on morals relating to money here.)
Money is an inexact medium of exchange. What you choose to exchange for money is your choice. You do not have to exchange your time for money. Your time is very valuable (as showcased in other book we recommend: Developing Talent in Young People.) Working for a dollar/hour wage (getting a "job") is only one way to acquire money. You have the choice to do other things. These are concepts that I have always intrinsically known, and books such as Think and Grow Rich and Rich Dad Poor Dad have reconfirmed these concepts through logic and examples that correlate well with my life experiences.
That said, any book can be taken the wrong way. People often see what they choose to see. Greedy people read these books expecting to find a method to "con" the world out of money they do not deserve. I do not relate with such desires. The secret to success is that there is no secret.
Personal Outlook on Financial Intelligence:
Although I am far from my goal of financial independence, I have noticed a striking change in my outlook on material things as my financial intelligence has grown. Most notably, I am more appreciative of why things cost as much as they cost. Instead of falling into some sort of financial depression that the majority of people who cannot control their money seem to have, I respect the cost of creation. I respect the efforts required to make products. I also understand that buying cheap is wasting more money in the long run.
It has taken some time, and I still have a long way to go, but I have shed a lot of my "poor mentality", for the better. This has affected my life by allowing me to easier purchase things that matter (for me it's things like computers, software, my office, etc.) which increases my productivity in my efforts to achieve my goals. Now, If I need something, I respect that it is worth what it costs. If I really need it, it's worth more than it costs.
Keep in mind that, at the time of this writing, I not only have a negative net worth but have had a negative net worth for over ten years. I am not ignorant towards the average person's financial problems due to any type of "wealth". (I am not wealthy.) It is quite the opposite. I relate to money problems more than most who know me would assume.
Personal Advice:
It is healthy to expand your financial intelligence. Needless to say.
If you choose to expand your financial intelligence, only take financial advice from those who have achieved, and those who are putting great effort into achieving, substantial wealth on their own. Individuals of inherited wealth are biased by default and are often misled, ignorant, and judgmental on the financial situation of others. It is hard for someone who has been given "success" to explain how to acquire it. That said, those of inherited wealth are judged unfairly in reverse. I have received no inheritance, and I believe it is for the best.
Do not sacrifice your passions in efforts to "get rich". You will never become financially successful via a trade you do not love.
The "rich" man wants it, obtains education to get it, then puts forth intelligent effort and achieves it. The "poor" man wants it, chooses to remain uneducated, puts forth unintelligent effort (or no effort at all) and does not achieve it. They both believe they deserve it. Who is greedier? It reminds me of, and perhaps is a derivative of, this amazing quote:
"The great difference between those who succeed and those who fail does not consist in the amount of work done by each but in the amount of intelligent work." - Og Mandino
About the Author: I am Matthew Doucette of Xona Games, an award-winning indie game studio that I founded with my twin brother. We make intensified arcade-style retro games. Our business, our games, our technology, and we as competitive gamers have won prestigious awards and received worldwide press. Our business has won $190,000 in contests. Our games have ranked from #1 in Canada to #1 in Japan, have become #1 best sellers in multiple countries, have won game contests, and have held 3 of the top 5 rated spots in Japan of all Xbox LIVE indie games. Our game engines have been awarded for technical excellence. And we, the developers, have placed #1 in competitive gaming competitions -- relating to the games we make. Read about our story, our awards, our games, and view our blog.