The rich consider spending more money = earning more money, while the poor's economic concept is saving more and using less = earning more money. Even if they have money, they are not willing to take risks. What they like best is that chickens lay eggs and eggs lay chickens.
If a person wants to make more money, he must fully mobilize the resources around him. Many people understand this, but forget that money is also a resource. If you want to earn more, you must make the most of your money.
Is saving money the best use?
Of course not. Money is like blood. Only by flowing in the body can it make sense and sustain life. If the blood is blocked somewhere in the blood vessel, the result can be imagined.
You put your money in the bank, Alipay, which looks safe on the surface and earns some interest.
Let's see, Alipay's current interest rate is around 4.0% (already good).
Do you know what the annual inflation rate is now? 5%—6%
This means that your money is depreciating every day. Today's 100 yuan will be worthless tomorrow.
Besides, if you save money, you are giving it to others to make the best use of it.
Charlie Munger has a famous saying: Everything should be reversed, always reversed.
Since saving money is not easy to use, the reverse is spending money. Spending money is not random, but valuable, so that every penny becomes the wealth of the future.
Bill Gates said: "It is as difficult to spend a sum of money skillfully as to earn a sum of money."
So how to spend money to maximize the use of money?
Noguchi Makoto, a popular MBA tutor in Japan, has been active in the financial field for a long time, and has worked in Mizuho Bank, JPMorgan Chase and Goldman Sachs successively. His book Learn to Spend Money tells us 1 the basic principles of spending money and two common influencing factors in easy-to-understand language.
The decision principle of spending money is simple, that is, whether the value obtained is greater than the price.
Buy when "value" is greater than "price"; When "value" is less than "price", wait and see for the time being.
Learning the principle of spending money is simple, but how to figure out the value and price.
Noguchi believes that we must consider how the future cash flow will change.
"Money generated in the future" is called "cash flow", and how much value an investment can bring is based on the amount of cash flow generated in the future.
The value of goods, projects and services depends on how much cash flow they can create.
In daily life, wallets are divided into three types, namely "consumption", "investment" and "speculation".
The so-called consumption refers to the act of buying in order to satisfy the desire.
This is easy to understand. Clothes, shoes and socks, cosmetics, meals, cars, travel, etc. What you usually buy belongs to consumption.
Consumption is essentially for the satisfaction of personal feelings, that is, practical, beautiful, convenient, fast, and even compare with others.
Therefore, consumption should consider whether the utility (satisfaction) obtained after purchase matches the price.
Investment refers to the investment behavior in order to improve future productivity.
Get a qualification certificate, participate in adult re-education, learn a new skill, manage money ... and keep accumulating competitive capital, expecting it to bring dozens or even hundreds of returns in the future.
Note: You bought books and attended training courses, but you didn't study and practice. This is not an investment, but a consumption that satisfies your desire.
The last "speculation", Baidu Chinese solution, takes advantage of the so-called "opportunity" to make a profit.
A typical example is gambling. Roulette, horse betting, roulette, mahjong, poker, pinball and even lottery and Mark Six can all be classified as speculation.
Consumption, investment and speculation, which will continue to create cash flow?
Obviously, investment > consumption > speculation, so we should consume moderately, increase investment and avoid speculation.
If you think deeply, you will find that a person's value is not determined by his total wealth, but by his ability to create cash flow.
No matter what form, no matter what responsibility, the ability to continuously create cash flow through investment, consumption and work is the most important.
People who only have money will be the object of envy, but not necessarily the object of respect.
What people respect and admire is a person's ability to create cash flow, not the money he has.
In other words, do you respect the rich second generation? Or an entrepreneur?
So what we need to master is the ability to create cash flow by spending money.
Two influencing factors
Real life is very complicated, and you won't play cards completely according to the rules, so you should consider the influence of other factors when spending money.
One is time and the other is probability.
The speed of human perception of time will change according to different moods and ages.
The same music will feel fast when it is quiet or happy, and slow when it is tired or irritable.
Life was slow when I was a child. The older you get, the faster you feel. For a five-year-old child, one year is one-fifth of his life, while for a 70-year-old man, one year is one-seventh of his life. So the latter will feel that a year passes faster.
Because individuals have different feelings about time, the effectiveness of the same time will vary from person to person.
If you are 20 years old, considering your age, you may choose a 40-year investment plan.
But what will happen if you are seventy years old? As you can imagine, receiving 2 million after 40 years is almost of no value to you. You don't even know if you can live to be a hundred years old.
Therefore, when you are young, you should lengthen your time and consider the utility of future cash flow.
If the annual investment is 10000 yuan and the annual return on investment is 10%, it will be 572750 yuan after 20 years.
This is the power of compound interest under the action of time.
However, for most people, the present is the most important thing. As long as the effective time of consumption is later than now, you will feel that you have suffered a big loss. But I don't care so much about future delays.
For example, if you take a fancy to a coat, the owner says that you can change the ownership in 10 minutes, you can make a reservation and pick it up next week. The time loss is only11000 of the latter. But in terms of perceived utility, the current 10 minute is much more painful than a week.
There was a famous marshmallow experiment in Stanford University in 1960s and 1970s. A group of children, each with a marshmallow, told them that if they could wait 15 minutes, they would get another piece as a reward.
Some children can't wait to eat, while others choose to be patient. After 14, those children who choose to wait are more successful in life and career.
Therefore, we should know how to delay satisfaction and give up immediate satisfaction for more valuable long-term results.
There will also be "twisted coins" in your wallet that confuse your judgment-lack of knowledge of probability and average.
Although the brain can infer a reasonable probability, you never want to use it, but trust your intuition.
The most famous is the "three doors" problem.
There are three doors for a program to guess prizes, and only one door has a grand prize behind it. The contestant chooses a door, and the host opens another door and finds that there is no one inside. The host asked if he guessed the other door.
The answer is change, the winning rate is 1/3, and the change is 2/3. Logically, it is not contradictory, but it is completely counterintuitive.
Why is the lottery winning rate so low?
You know, "almost zero" does not mean zero. In contrast, "almost certain" does not mean certain.
Daniel Kahneman, the founder of behavioral economics, put forward:
People will overreact to lower probability and underreact to higher probability.
In other words, people will overestimate the probability that the winning rate of the first prize is almost zero and underestimate the high probability of not winning.
Another example is the size of the bet. The probability of big and small is 50% every time, and it is big for five consecutive times, so you will think that the sixth time is likely to be small. This is called the law of decimals, and it is also called the gambler fallacy.
Gambler fallacy (decimal law) is considered to be one of the reasons why people misunderstand "returning to the average".
Many people will misinterpret "returning to the average" as
That's why gamblers get deeper and deeper.
Keep losing, keep losing, this time it's time to win. This idea is human nature, and even seems to be true. However, even if the coin of 10 is continuous heads, the probability of the next head is still 50%.
In addition, people sometimes deliberately take risks when facing losses. I think I lost anyway and invested so much cost. Even if I lose more, as long as I win the prize once, everything will pay off.
Those who have invested in cost economics are called sunk costs, which have been lost and cannot be recovered.
From the perspective of decision-making, although the past cost has caused the present state, the current decision-making should consider the possible future expenses and benefits, not the past cost.
If you go to the cinema and watch 10 minutes, you don't like it. If you watch 10 minutes, you will be even more disappointed. Will you give up wasting time or continue to endure watching movies?
The correct way is to stop thinking about the ticket money already paid and focus on the present. When you are not satisfied with the movie, you should pull yourself away.
summary
All right, let's exercise. If you want to spend more and more, you must learn to spend money correctly, learn to distinguish between consumption, investment and speculation, judge consumption by utility, judge investment by the value of cash flow, learn knowledge of probability and statistics, improve your investment ability, and make every penny undergo nuclear fusion in the future.