At the end of the day, there are just four ways to use your money.
- Spend: You can exchange your money for something that you need or want now.
- Save: You can store your money for something in the near or distant future.
- Give: You can provide to a cause or person without expectation of compensation anytime.
- Invest: You can expend money in the expectation of receiving a profit in the future (usually 10+ years).
I had the privilege of sharing about how we use our money with 2nd, 3rd, and 4th graders this past week at one of my children’s schools. They gave a lot of great examples of how we can use our money, from housing and food, to Pokemon cards and candy. I presented to over 140 kids in a few hours, and all of them understood spending, saving, and giving, but just one 4th grader correctly described investing:
“Investing is when you want your money to grow.”
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I assured all the classes that many adults would not be able to explain what investing is. We then showed how money could grow from $100 to $1,600 in 40 years at a 7% rate of return. If the rate of return were higher, the money would grow faster. On a more fundamental level, we can receive a “return” beyond the immediate transaction in the other ways we use our money, too.
When we ensure we use our money according to our values, we realize a return that satisfies long past the initial exchange of money.
When a tired new mom pays for a cup of coffee, her return may be some caffeine to help stay awake, but it might represent the first time she’s showered, dressed, and out of the house with a newborn that day, getting a moment to enjoy the world she’s been away from for the past few weeks. She is getting connection.
When a high school student saves for a car, she may be getting transportation, but she is also getting the ability to maintain a job and visit others. She is getting esteem, income, and community.
When a business-owner partners with a particular cause, he is giving money to something that matters to him, but he is practicing a value of generosity and abundance. He is getting to be a part of change.
When you sign up for your employer’s retirement plan, or open an individual retirement account (IRA), you are building wealth, but you are also getting security and peace of mind for the future.
Thought: How you use your money is a reflection of what you are receiving, both from the initial exchange, and from the deeper way it reflects what matters to you. How are you using your money today, in the next year, and a decade from now?
Photo by Annie Spratt on Unsplash