A Ridiculously Brief and Incomplete Historical Perspective of Currency

The ancient Chinese used cowrie shells as currency. Babylonia used barley in their towns and villages while silver (shekel) was used mostly in their cities. As I understand, silver and cattle were used by the Jews for much of their trade while Greeks used silver and ox. The Persian Empire used both animals and gold. Copper and bronze, as materials of trade, were introduced by the Romans, presumably, in the 3rd and 4th Centuries B.C. As you can imagine, trade was difficult on a mass scale or in long distances as animals and barley were cumbersome to move from place to place. Cowrie shells were a lot easier to transport but many villages and tradespeople did  not honor them. They were not valued n their own locales.

Because metal transport was heavy, metal currency stayed local.  Bronzed axes in Gaul and iron swords in Britain were common local metal currencies. By the 3rd Century A.D., the metals in the coins were so minimal that the coins’ value were minimal.  Except for gold. Gold’s value increased to the point when, by the 4th Century A.D., gold was the standard bearer for currency exchange. It too was heavy. As it was also difficult to transport, it was not yet in great quantity. But its value was known, its sources were searched, fought over, and hoarded.

Wampum was a common unit of currency between the English and Dutch in the new Americas. Tobacco notes were issued when wampum beads were discontinued. Metals, such as gold and silver, were hard to come by in the developing territory.

Gold eventually became the standard of measurement for most currency, and more specifically, paper money. Because Its purity could be measured, it had stability. Its size could be measured against its purity. This gave currency a standard and ease in “foreign” exchange, exchange beyond one’s borders. Until recently (the last hundred years), there was a direct ratio between  the amount of gold a country stored and the amount of currency it had in circulation. A modern country “back then” backed its currency by its gold. That is significant to think about. A strong country did not have more money in circulation than it had gold.   Today, that has changed. The gold standard has been removed. Most currency is pegged to the US dollar which, itself, is backed by “the full faith and credit” of its government. More money can be printed as its measure is based on faith and credit. As long as that good “full faith and credit” is supported, its money is valued.

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3 Tips to Developing Money Stewards at Home

An effective way to view  money at home is to regard money education as a process rather than as a single event instruction. When money education is set up like this, money behaviors can be talked about, tweaked and managed more easily.

Here are 3 tips to get you started in developing money stewardship at home:

1        Begin by asking your family members what money means to them. Once the question has been asked, listen, without interruption to their response. It is critical that you not interrupt so your family members feel listened to. They do not want to feel this was a set up question for judgement and commands. When your children feel heard rather than feeling like they are being judged, they will more likely be candid with you in their response.

2        Put together an agreed to plan of action to develop valuable money habits in these areas: saving, invest, donating, earning, spending, what we at Focus and Sustain call the 5 S.I.D.E.S. of Money©. You will find your children are drawn more to one or two “sides” more than others. Explore these with them. Create limits and challenges for them to explore their interests.

3        Talk about money. Set up money nights where you talk about topics like: budgets for vacations, issues your children are running into, budgets, how to make money choices, etc.  Open  up the dialogue with welcomed feedback, with parameters around accountability, develop measurability to plans. All these will develop stewards to money at home.

Don’t Let Money Confuse You

Money habits and behaviors have great impact: if you spend and don’t save; if you save but don’t invest, if you invest and can’t share; if you have money but can’t generate money all have their consequences. It may take some time to see the consequences, but they are there. Money issues eventually surface, most frequently when we are in a relationship with someone else and their habits and behaviors differ from yours.

  • If you spend and don’t save, you may find that you don’t have the resources you need for retirement, for medical tests or costs that insurance will not pay for. Strive to save 5% of your net income for that emergency saving. Determine your “zero,” a number you never fall below. Use 5% of your gross income as an initial “zero” if saving is difficult for you.
  • If you save but do not invest, you will find that inflation and taxes will eat away at your savings. Partner with a financial advisor who can help you learn about investing. Make 15-20% of your gross income, your investing objective. Define a purpose for your investment and develop an active relationship with your advisor.
  • If you invest but have not yet helped others with your financial generosity, you might be surprised at how good it feels to assist someone in need. Organizations and causes you believe in can use your generosity in ways that do make the world better. Individuals, down on their luck appreciate your helping hand at an extremely difficult time in their lives. Make 5-10% of your net income a goal for giving.  Find an organization that aligns with your passions and beliefs and enter a giving program with them.
  • If you give money, and do not yet understand the value of generating your own finances, start a project that you personally fund. Become an entrepreneur. You will learn a lot about business and yourself! Alternatively, develop skills that are marketable and search for an opportunity in a field of interest to you. Be creative and bold in your search for work.

Money rocks! Don’t let it confuse you.

 

Two Insightful Money Observations

Money is merely a tool, which means that money itself is not THE culprit. If stays where we leave it, it goes where we move it to. With that as a backdrop, let’s look at two scenarios:

  • More earnings mean more wealth       Y             N

Not necessarily as money is easily spent. Data from the U.S. Bureau of Economic Analysis reports that the personal savings rate is at about 3.20% of income with lesser income earners saving more than higher income earners. The data continued to show that we exhibit one of the lowest savings rates of developed countries; only Spain, China, and Australia save less than we do, currently.

  • Money Can Buy Happiness                     Y             N            

Yes, up to a point. Think of what that Powerball lottery could do for you! Science has researched this question and found that how we spend money has an influence on our happiness. Research shows that happiness is increased when we spend money on others more than on ourselves. Does this have to do with experiencing satisfaction? I don’t know, I am merely asking. One study, I remember reading from the Weatherhead School of Management at Case Western University, indicated that once people earn more than $200,000, their level of happiness did not increase significantly.

 Money is very personal. Being personal, it is important that you understand what money means to you, so it can be the sharpest tool in your tool chest, doing what you want it to do for you!

 

2 Steps to Take When Money Conversations are Difficult to Initiate

 

Step back for a minute, and take inventory. The inventory I would like you to take consists of: the ease at which you enter conversations about money.

First, take note of what the intention of the money conversation you are about to begin is. If your intention is to blame, shame, or guilt someone else’s behaviors or actions, this conversation could very well be difficult to have. Who wants to be part of a conversation where accusations or disappoints are hurled? I do not know anyone who wants to be part of that.

Reframe your intention so it is not about how you want the other person to feel, but instead, determine what it is you want to achieve from the conversation. For example, let’s say you do not like the spending habits of your spouse or partner and want to let them know this…yet again. Instead of wanting to express how inappropriate you think it is for them to spend as much as they do, talk about how important it is for you to save. Then ask for their support on how to add a savings to your money activities.

When you know what true intention to the conversation you want to have, you can initiate that conversation without attaching attributes of shame, blame, or attack to the person with whom you are having the money conversation. Instead, you are collaborating to further your intentions rather than looking to release an arrow laced with contempt towards someone else’s feelings.

Second, look at what outcome you want from your money conversation. Using the last example, your preferred outcome may be to start a savings program. It is important to know what outcome you are aiming for so you can use this outcome as your reference and return to it when you use trigger points leading the conversation down rabbit holes to discord.

When money conversations are difficult to initiate, know your underlying intention for the conversation you want to have. From there, identify the outcome you want so you can communicate that to your partner. Remember to return the conversation to its intended focus when it goes astray.

2 Steps to Take Now to Reframe Unproductive Money Behaviors

According to a survey by Wells Fargo, nearly half (44%) of those surveyed said that money conversations were the toughest to have, more difficult even than religion, politics or death. If you find that you are one of those who find it difficult to initiate or be in important conversations, you will want to read further. Money holds a lot of judgmental emotions and tension as inappropriate behaviors can usurp the initial intention of the money topic.

Let’s examine the following situations: You are at a dinner with friends and the bill comes. What happens next? Do you grab the bill? Do you wait for someone else to make a move? Do you talk about splitting it in half or per everyone’s individual order?

And how about this situation: You are invited to join an “By Invitation Only” group on a long weekend retreat. The group really wants you to join them but you know you do not have the extra money put aside for this. What do you tell them? Do you make up another “reason” for not being able to join them? Do you tell them you will think about it as a way to avoid talking about it? Do you put it on a credit card knowing it will take you eighteen months to pay it off as well as the other items on your credit card accruing interest each month?

It is so easy in these situations, and many others, to keep your thoughts to yourself; those thoughts like: “Let’s split the bill per each individual’s order.” “I can’t come this year, but let me know the cost for next year, so I can save up for it.” You do not want to appear different, inadequate, or bothersome. You want to do what everyone else is so seemingly agreeable to doing.

Unresolved money conversations create tension because you add a perspective of shame, guilt or judgment about you and money. But when you start talking about money openly and without the shame, guilt, or judgment built into the conversation, you can develop respect and understand around money and your role with it. But how do you do this?

There are two steps you can take immediately to begin to reframe your behaviors with money. The first is to understand what money was like growing up for you. I call this understanding your money stories. Begin by asking yourself: “How was money talked about when I was little?” “What did I do with allowances or financial gifts that I received when I was growing up? How did I talk with my friends about money when I was a teenager?” These and many other questions will give you insight into your own early views on money. You will probably recognize patterns you use today due to your early associations with money.

The second step you can take is to determine how you are going to handle money situations when others are involved, before the event happens. If you are going out for dinner with others, you can send a quick text to share your idea of splitting the bill. Prepare a response when you are asked to join events you cannot afford. Letting people know you have not allocated an amount for a particular “retreat” or other event to your budget presents a sense of responsibility with your money.

I know this just scratches the surface of changing money behaviors and habits but I thought it was important to talk about this.

Let me know how you handle money so money is an ally to you and your goals in life. I would be delighted to hear from you.

Saving Money Is Easier When You Do This

Saving money is difficult for some people. It’s just too easy to part with those bills taking up space in your wallet. Plus, those bills are worn and small denominations. Why keep them when you can just get rid of them on a mindless transaction.

 

There have been several studies, and a recent one, found in the Journal of Consumer Research, stated that: “The physical appearance of money can alter spending behavior. Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others,” concluded authors Fabrizio Di Muro an Theodore j. Noseworthy.

 

Participants in several studies were given worn or new bills and their behaviors were observed as they went shopping. The participants favored the newer and crisper bills and they favored larger bills. By favoring, the participants were less eager to part with the crisper bills and would exchange worn bills for goods even if a crisper bill was of a smaller and more appropriate denomination.

 

So, if you want to save money, give yourself crisper bills. If you want someone else to save the money you give them, give them crisper bills as well.

 

Look at how you use your worn versus crisper bills and if you do not have crisp bills, ask the cashier for them when requesting change or ask your bank teller for crisp bills when they give you cash. Tell me your experience with your worn and crisp bills. Which do you favor?   img_5829

Pay Yourself Second, You Will Come Out Ahead

Everywhere you go there seems to be a line whether you are buying your coffee or tea, getting through airport security, waiting for a table at a restaurant, there is always a line.

 

It may not be as visible, but your money has a line forming for it also. Who is always first in line for it? Why, your favorite uncle, Uncle Sam. Uncle Sam demands to get paid and does what he can to stay #1 in line for his portion. Taxes always come out first in a financial transaction. Uncle Sam demands immediate compensation from a deal. But who is second in line for your money?

 

It depends. For many it is the merchant like the grocery or retail store. For some it is the account that you have agreed to pay second like a settlement, alimony, or a collection payout. I want you to reconsider who should be second in line and if this person is not already there, I want you to put them second in line.

 

I want you to place yourself second in line, after that demanding Uncle.  I want you to be as adamant about being second as Uncle Sam is about being first in line.  And be as adamant about that as Uncle Sam is about being first. I want you to take your position seriously and responsibly by having a plan and manifesting that plan so the money you have for yourself builds and supports the life you want.

 

Think of the 5 S.I.D.E.S. of Money© and determine how you are going to allocate the money you will have by paying yourself second to Saving, Investing, Donating, Earning, and Spending. When the money comes you then are ready to allocate it as you planned to those five S.I.D.E.S. of your financial life.

 

Be fanatical about putting money into those 5 S.I.D.E.S every time you have money pass through your hands-without exception and you will become a steward of your own money. You will come out ahead.

 

Leave a comment on how you make sure you pay yourself second.

Thank You for Being Part of My Fulfilling Year

Reflecting

 

Thank you for who you are to me—people of grace and profound commitment to bringing a richer weave to the fabric of life-your own and the world around you.

 

When I reflect on you,

You who have deliberately chosen to direct your lives

Purposefully and with great meaning

I see shimmering stars lighting my path

I see the beauty of persistence and determination in you.

 

As I think of you

I feel the essence of the freedom you feel

When enduring strength and power replace your initial fears and doubt.

I am touched by your commitment to being your best

With your Legacy, your Life and your Money

 

HAPPY HOLIDAYS

We welcome your comments

Are You Allocating Your Money to all 5 S.I.D.E.S.?

What S.I.D.E.S. of money are you favoring? In the second of three levels of our Money Focus program, we ask the question: “What sides of money do you use and which do you favor?”  We ask this so people can determine how they currently attend to what we call The 5 S.I.D.E.S. of Money©. Theses 5 S.I.D.E.S. are:

Saving

Investing

Donating

Earning

Spending

 

Most people find that the sides they use the most are spend and earn. A big drop off occurs before I see either saving or investing as the next sides people attend to with investing and saving last.

 

Where does donating fit? Surprisingly, it is not last. It comes before investing. The World Giving Index found, that as a percentage of population, the U.S. ranked ninth in 2014 among approximately 140 countries. This index found that about 68% of the U.S. population donates money. The Gallup Poll found that as of April 12, 2015, 55% of adults have money invested.   USA Today, in March of 2015, found that 66% of the population saves but 47% reporting that they only have enough to cover living expenses for 90 days or less.

That is important information which illustrates how fragile and tenuous people’s financial lives are.

How do you address money at home so these sides are attended to in ratios that sustain a healthy lifestyle? What S.I.D.E.S. do you attend to and in what percentages?

Research has found that many of the top earners have their money allocated to the 5 S.I.D.E.S but they don’t share healthy stories or teach their children or grandchildren about productive money habits. The next tier of earners, tend to allocate money to earning, investing, spending and donating, with only extra money, when it comes, allocated to saving. They don’t teach their children or grandchildren much about money either.

Below these thresholds, people skew their financial allocations towards spending, earning and donating only if there is extra. Saving is rarely attended to. This oversight can lead to lifestyle upheavals should a disability or loss of income occur.

When children are not exposed to all of these buckets early they tend to give them scant attention as adults. The cycle of poor financial habits is reinforced and passed on to another generation.  You can end this by mindfully allocating your money to each of the 5 S.I.D.E.S. of Money© deliberately, purposefully, and continually.

What S.I.D.E.S of Money© allocation do you exhibit and in what percentages? How is this compromising unforeseen financial challenge such as illness or loss of income?

Tell me how you allocate your finances to the 5 S.I.D.E.S. of Money© and what risks you are subjecting your financial wellbeing to.

 

I would love to hear from you.