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Who are you in the Economic System?

Can you make money and spend money at the same minute? If you can’t, check below how to.

Before I became interested in investment, I did not even know that I could be anyone else other than a shopper!  So if I wanted to have more money left at the end of each month, I would try to squeeze by and shop less.  And I have been very good at it.  But let me tell you this, I felt horrible.  I felt dirt poor.  I remember the time that I wanted to buy myself a new bra, but I didn’t dare to because I wanted to save more.  And I ended up blaming my husband (at that time my fiancé) that he was not rich enough (how relevant!).  Don’t get me wrong;we both were engineers and earned good incomes based on Statistic Canada.  But still I wanted to get rich fast, and I thought it could be done through saving! (have I ever been so wrong!).

After I embarked on my investment journey and went to work for an investment bank and with a policy maker, this experience quickly opened my eyes because I was able to see how most, if not all, systems work.  I saw how economic game plays, how political game plays, and how non-constitutional politics game plays with my own eyes.  (If you want to know more about all these three systems, I highly recommend the work by James Dale Davidson.  His insight is just awesome.  He will change the way you think about what you see in our system today.)

From  what I gathered, I learnt that to be able to physically live well in our current society, we need money (yes Sara, that is not new).  I know… I know.  My point is that not only should you know that you need money,  you also have to understand how money flows in our society.  So we can go there with a basket and collect them, not just chase them as most people do.  Money flows from one entity to another.  It flows into one entity more than another.  And it flows out from one entity more than the other as well.  So can you identity which role you always play consciously or unconsciously in our economic game?

Consumer

Ones who pays for something to consume either goods or services.  They   are motivated by direct relationship with the values of products and services have to offer.  Depending on the products, they might seek low price, durability, healthy, good function, support their self-image, good experience and etc.

Producer

Ones who make goods and services that are sold in the economy.  Their motivation varies based on the different stage of their business.  It can start from wanting to provide for their family or want to do something that fulfills a passion or vision.  Both will eventually move towards wanting to reach more consumers, and grow their business.  Their motivation may change to wanting to satisfy the shareholder (the real owner of the business).

Owner (investor)

An investor is someone who allocates her/his money (capital) to provide funds for businesses (or producers).  They expect to gain a profit return from that capital at a higher return rate than the banks.  The investor can invest directly in company if they have a large fund and they may gain the right to manage that company because they are now a part of the owner. Or the investor can invest in a small part of the company called stock.  Each stock is a piece of the company which carry the ownership right.  So if a person owns a stock, they own the ownership right (shareholder).  They have a claim on that company profit as well as loss.

For example, if you buy a share of Apple stock, for every product it sells after deduct all expenses, the profit will be shared among all the owners/shareholders.  That’s you!

Investors can own shares of different companies at one time through stocks; this is why it makes sense to call them owners of economic.

Yes.  This is nothing new, and you may have taken it in Economics 101 (well, they don’t talk about the investor though).  This is something you already know; me too.  However, the difference is when I can consciously know who I am stepping into, it makes me become more conscious when I am going to spend my money.  Also, if you know how to invest like our new investors from The Financial Freedom Bootcamp (Scott please hyperlink here), you can always have more than one identity in one day.  You can make money and spend money in one single minute.  

Let me tell you again when I thought I could only be a consumer in my economics and tried to get rich by saving more and squeezing by, it was not fun.   However, when I squeezed by knowing that I could grow my money powerfully, that was always exciting until this day!

Keep smiling; it is your time.

Big Hugs,

Sara

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