How can I get rich? Is money important in life?

Understand that "Wealth has use value and money has exchange value"

It's not absolutely essential to use Money but it is necessary if you don't plan to live forever because living without out it means everything takes a lot longer

It is possible to not bother with money and just exchange wealth items by the use of barter. But barter has all sorts of problems.

Let's take a simple example:

A farmer decides that he wants a cow so he can have milk for his morning cereal. So, he takes two pigs to a farmer's market. There he spies an excellent cow. He asks the farmer what he wants for it

Farmer 2 "26 chickens"

Farmer 1: "I've got 2 fine pigs, will you take them instead?"

Farmer 2: "I've got plenty of pigs. I want some chickens so I can have eggs for breakfast"

So Farmer 1 takes his pigs around the market to see who will trade his pigs for chickens. The first farmer he meets offers him 20 chickens but he turns it down because he needs 26. All day, he walks his pigs around the market and the best deal he can get is 25 chickens. He decides to try negotiating with the other farmer and takes a chance. He goes back to the farmer

Farmer 1: "I've got 25 chickens, will that do?"

Farmer 2: "It would if I hadn't sold the cow for 20 chickens"

Farmer 1: "But you wanted 26"

Farmer 2: "True but he had 20 right there and then and I didn't want to wait all day to get a price. So I sold the cow to him. Sorry"

As it was nearing the end of the day, the farmer decided that he would try to buy a lesser cow. He approached the farmer

Farmer 1: "I'll give you 25 chickens for your cow"

Farmer 3: "No thanks, I've loads of chickens myself. But I'll swap for 2 pigs"

Farmer 1: "Aaaargh!"

So Farmer 1 now had 25 chickens he didn't want, had to get home in one piece, had to find a way of feeding them and protecting them from foxes. All because he wanted a cow and didn't have something called money.

Now consider the same example but instead of wanting chickens, the second farmer wanted money in the form of 26 FarmCoin. Now the story unfolds in the same way until the first farmer discovers that the cow is already sold.

At that point, he can choose to go home with 26 FarmCoin in his pocket to be ready for the next market. If he does this, the FarmCoin are easy to transport, will not die on the way and don't need feeding when he gets the home. He can just keep them in a drawer until he's ready to use them.

However, if he chooses to go to a third farmer to buy the cow, he no longer has to worry about having the wrong "currency" because the third farmer will also value his cow in FarmCoin rather than in something he doesn't have. At this point, he also knows that the better cow from the second farmer was sold for 20 FarmCoin which gives him an idea of how much he should be paying for this second cow.

And so life is so much easier and simpler simply by using money.

If you want to see how much easier money makes things, watch this modern day attempt at barter.

But remember that money only has value if you have something to exchange. It has no value on its own

If that farmer had taken his 26 FarmCoin home, put it in a drawer and then forgot about it until he re-discovered it 20 years later, for those 20 years, that money has been useless. In fact, it would've also devalued by the rate of inflation. But that's another story.

So, if you want to be rich, you must understand that money is only any good when it's out working - by exchanging it for something else. In fact, you never want to be holding money if you don’t have to because it could lose its value at any moment. You should always store it in wealth items that can be converted into money when you need it.

There are two words you need to understand if you want to be rich:

ROI: Return on Investment. You want to buy low and sell high.

Repetition. You want to do that again and again and again.

So you could do this two ways:

Buy items that have a low use value for the people you're buying from who will be happy to let them go for a low price and then sell them to people who have a higher use value for them and so pay a higher price. Example: buying Manhattan from the native Americans in exchange for some trinkets. The problem with this is the lack of repetition - you can only buy Manhattan once and sell it once. True, you could repeat the same trick with other land and other Native Americans but that adds to the cost.

Buy something with a low use value at a low price. Then add value to it and sell it out at a higher price. Once you learn how to do it, you can do it again and again and again. Example: high-class chef - they take a few simple items from the ground, prepare them and, voilà, £250 per plate. Brilliant. Of course, they don't make real money until they write a cook book but that's another story.

So to become rich, all you need to do is find the best ROI for the quickest repetition rate.

It's as simple as that.

Of course, just because it's simple doesn't mean that it's easy :)