I often like to imagine what would happen if time travel was possible. What if I could go back and change things to make the present time better? I’m not alone in this – right?
Would I try and rescue some famous historical figures from certain death? Would I plot to assassinate one of the many dictators there have been, in the hopes that history would come out better overall?
Nah, I’d do none of that. If there’s anything that movies like Back to the Future have taught us is that messing with the space-time continuum is bad news!
There is only one thing I would do.
I’d go back and have a money conversation with my 18-year-old self.
You’ll have to indulge me in my attempt at writing fiction. This isn’t my usual type of article, but since blogging can take any form, I thought I’d have some fun with it 😉
A Fictional Money Conversation
I stepped out of the steaming time machine into a field near Manchester, UK. It was a bleak, rainy day – standard. Thankfully this method of time travel wasn’t like in Terminator – here you got to keep your clothes. Phew!
I checked my wrist watch, which indicated that I had just under an hour to get back to the time machine if I was to make it back to 2017.
I made my way into the University halls where I lived during my first year in England. It was a 1960’s building with zero charm and asbestos-filled ceilings. It wasn’t that nice, but I had one of the best years of my life there.
After walking around and entering the building using the 4 digit access code that I still remembered 10 years later, I found my 18-year-old self in the laundry room, turning on the washing machine. Perfect spot for a money conversation.
I decided to break the ice with a casual “What’up dude?!”.
Young Ricard turned around, quickly analysed me and obviously didn’t recognise that I was an older him. It made sense – I was about 25 lbs heavier than him, and what hair I had lost in my head I’d gained on my face.
“Hey! How’s it going? Are you new here?” he asked.
Over the next 20 minutes, I explained who I was, how I had got there, and also managed to calm him down enough to have a more normal conversation. This came at a cost – he forced me to reveal whether Leonardo DiCaprio would end up winning an Oscar. I was a weird kid.
What Is Money?
It was time to get down to business – time to bring out the big guns of financial wisdom. I only had 32 minutes left to make it back to the time machine.
“The reason I’ve come here is to change the way you think about money. This way I hope you’ll make better life decisions, sooner. Tell me, what do you think money is? How would you describe it?”
He thought for a few seconds, then replied “Money is a thing you earn at a job that you can then use to buy stuff. Right?”
I was glad to hear such a basic description of the concept of money. I was as clueless about it as I remembered.
“Yes, that’s probably how most people would describe money,” I said. “But that’s not what money really is. It goes deeper than that. You better make a damn good mental note of what I’m going to say, as it will change your life – trust me, I know!”
Money – The Currency of Freedom
I sat atop an unused washing machine, took a deep breath and proceeded to explain one of the hardest concepts to understand.
“Money is the currency of freedom. Once you understand this, you can start to become free.”
As I spoke those words, I saw a familiar expression of confusion on my 18-year-old self’s face. I had seen this many times before, every time I explained this concept to people.
I continued, raising my left hand and facing my palm upwards. “Imagine the poorest person in the world. This person will have to rely entirely on others to survive, doing the worst paid jobs there are because he is desperate. This person will have no choice, no flexibility and no freedom.”
I raised my right hand and made a fist. “On the other hand, the richest person in the world doesn’t have to rely on anyone to survive. This person could take a year off to travel the world and it wouldn’t matter in the slightest. Do you know why?”
Past me smiled as if he’d been asked an overly easy question in an exam. “The difference is that the rich person has money and the poor one does not. Without money, he can’t buy anything.”
I smiled. “Correct. But there is another factor to consider – what if I told you that after the rich person came back from her year-long around the world she actually had more money than when she left?”
He chuckled and frowned his brow. “That doesn’t make any sense. A trip around the world will cost money – a lot of it! Besides, she won’t be working, so she won’t be replenishing what she’s spending!”
“Of course this trip would cost a lot of money, but the richest person is the world also earns money by having money. Her money would be invested in stocks and other income-generating ventures which would provide her with lots of money without having to work for it. This is called passive income, and it’s what’s going to make you free one day.”
Wealth Is Relative to What You Need
I looked down at my watch. 21 minutes left. I also remembered that my 18-year-old version was still basically a kid and that all this information was a little overwhelming for him. I needed to make haste.
“I have to go soon, but I have to tell you about another really, really important concept, which will one day completely change your life. You see, the example of that rich person may sound out of reach to you and most normal people, but it really isn’t.”
I stood back up and looked myself in the eyes. “Being rich isn’t about how much money you have, it’s about how much money you need. Think about this: If you could live comfortably on a small amount of money, would you still want to have a high-stress, high-pay job that would suck all your energy?”
My past self looked down at the floor. Things were starting to make a little bit of sense. “I guess not. But how can I only need a small amount of money? I want to live in a huge house and drive a sports car one day…”
“It comes down to one decision,” I said. “Which do you value the most: your freedom or appearing successful by living the high life?”
I continued. “This is difficult for a lot of people because the world is designed to trap you into becoming a mindless consumer. You’ll feel that you need to buy things constantly because your peers and advertising will make you believe it’s what you need. It will feel good when you do. You must try your best not to fall into this trap!”
I could tell that he wanted to believe what I was telling him, but he was fighting against a lifetime of advice and prejudices that urged him to consume and live like a rich person.
The Secret Weapon: Saving
10 minutes left. I needed to wrap up and run to the time machine or I’d get stuck in 2006!
“You best weapon against all of this is saving. I don’t mean saving to buy a Playstation 3 or a holiday – I mean saving for your freedom. The more you save the more freedom you’ll have. Some day, you’ll save enough money to let you reconsider your career and have the freedom to start something daring and risky. Something that will make your work so much more rewarding. Save for long enough and you won’t ever have to work again.”
He smiled widely at that idea. Not having to work sounded great to him. “Gotcha. So I’ll just save a lot of money and keep it in the bank, right?”
This alarmed me. “No! That’s the old way to do it. You need to make your money grow, and the bank just won’t do. Invest in the stock market. Google mutual funds and dividend growth investing. That will set you off on the right path.”
The 5 Main Lessons
I needed to leave at once. I reached into my back pocket and took out a folded piece of paper that I’d prepared to give to my past self. I handed it to him as I made my way through the laundry room door. “Keep this safe. These are the main things you need to understand.”
He eyed the piece of paper then looked up at me.”Thanks… Do you have to go now, though? Can’t you stay a little longer? There’s so much more I want to ask you…”
“Sorry man, this was a one-off kind of thing,” I said. “You now know the basics. Stick to these and you’ll be alright. I promise. Take care!” I spoke the last words as I was already sprinting through the corridor and out of the building. I just about made it back to the time machine in time to get back home safely.
I wondered if my reality would be different when I got back to my time. Would my money conversation with my 18-year-old self have worked? I hoped for 6-figure balances on my investment accounts when I got back to the new 2017.
The time machine revved up its engine, put its flux capacitor at full throttle and, with a muffled bang, I was gone.
After our money conversation, 18-year-old Ricard unfolded the piece of paper and read what was written on it:
- Money can make you free, but it can also make you a slave.
- Being rich isn’t about having lots – it’s about needing little.
- Don’t fall into the trap of consumerism. Buy only what’s necessary and really makes you happy.
- Earn plenty, spend little and save the difference.
- Learn to invest your money in the stock market. The sooner you start the better.
He felt as if he had the biggest secret of humanity in his hands. In a way, he did. He wanted to go and put it all into practice – learn about the stock market and start a budget spreadsheet to lower his expenses, buy then he remembered that he was meant to meet some of his friends for a beer.
He re-read the third point on the piece of paper:
Buy only what’s necessary and really makes you happy.
Having beers with his friends definitely made him happy, so that’s how he’d spend the evening.