Look in the Mirror

Why money isn’t the answer to your problems

When I was a child, my dad told us that the Japanese were aware of three powers: the sword, the jewel and the mirror.

The sword symbolizes the power of weapons. Great nations throughout history have invested in their military to gain an advantage over other nations. For instance, America has spent trillions of dollars on weapons, and because of this, is the most powerful military presence in the world.

The jewel represents the power of money. I've observed there is some truth to the saying, "Remember the golden rule. He who has the gold makes the rules." History is filled with examples of the rich using the power of money to gain an advantage.

The mirror symbolizes the power of self-knowledge. And, according to Japanese legend, self-knowledge is the most treasured of all three powers because it guides how all other powers are used, whether they are used for good or for ill.

What controls you?

For the middle-class, the power of money all too often controls them. Each day, members of the middle-class get up, work hard and fail to ask if what they do makes sense.

Instead, controlled by the power of money, the middle-class follows the crowd. They conform rather than question. They blindly repeat mantras handed to them by so-called experts: "Diversify." "Your home is an asset." "Get a safe job." "Don't make mistakes." "Don't take risks." "Save your money."

Ultimately behind the power of money is fear.

We fear not having enough, and we fear being ostracized. The fear of not having enough causes us to work harder and harder. The fear of not being ostracized causes us to try and keep up with the Joneses. All too often, the result is the same. The American dream turns into an American nightmare. Here is the familiar story.

Recently married, a happy, highly-educated young couple moves into a cramped, rented apartment. They realize they are saving money because two can live as cheaply as one. For a while they are happy.

Then, the apartment begins to feel cramped. They see friends moving into homes and having kids. They decide to save money to buy their dream home so they can have kids too. They now have two incomes, and they begin to focus on their careers. They make a lot more money, but their expenses go up as well.

As the young couple's income goes up, their tax burden rises. And when they buy their dream home, they incur property taxes. Additionally, they also buy a new car, new furniture and new appliances to match the new house. Their liabilities column goes up and is full of mortgage and credit-card debt.

income goes up as do expenses and liabilities

They are now trapped in the rat race. Soon they have a baby and work harder to make ends meet. A credit card comes in the mail, and they max it out trying to stay afloat. A consumer credit agency calls and promises to help them consolidate their debt into one low payment. They do it, pay off their credit cards and feel like they've done the smart thing. They breathe a sigh of relief.

Then their friends invite them to the mall for the Memorial Day sale. The young couple promises themselves they won't buy anything, but they bring the credit card just in case.

I've heard this story thousands of times all over the world. Each time, the story is followed by the question, "How can we make more money?"

I tell them, “Your problem is not a money problem.”

Rather, the problem is a financial education problem. They don't know the difference between an asset and a liability.

Money seldom solves people's problems. Intelligence and a financial education solve problems. And if you want to be rich, you must understand both how money works and how you work. You must look in the mirror and understand your motivations, desires, and dreams—and stay true to them even when it means going against the Joneses.

Some people go after the power of weapons. Others go after the power of money. But true power comes from the mirror.

I encourage you to spend some time tapping into its power today.

Portions of this post were adapted from Rich Dad Poor Dad.

Do you see someone with a financial education when you look in the mirror?

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Original publish date: October 16, 2012