We use it. We crave it. And we chase it.
“It” being that paper in our wallets, of course. And those digits on our bank statements. And let’s not forget, in today’s virtual world, cryptocurrency.
But as novelist Thomas Pynchon once wrote, “Money, it turned out, was exactly like sex. You thought of nothing else if you didn’t have it and thought of other things if you did.”
Here’s the thing, though: How does money work?
It’s a complex yet fascinating subject that can make even the savviest among us scratch our heads. So with the help of Robert Breedlove, an ex-hedge fund manager and host of The “What Is Money?” Show, it’s time to delve into the labyrinth of monetary systems.
In a sit-down with Vishen, the founder and CEO of Mindvalley, Robert sheds light on everything from Bitcoin and central banking to our intrinsic relationship with money itself. And learning how money works is the first step to transforming your relationship with the all-mighty dollar.
As a Mindvalley Member, you can listen to the whole interview, The Fundamentals of Money With Robert Breedlove, on the Mindvalley App.
How Does Money Work?
Money, moolah, cash, dough, greenbacks—call it what you will, but this ubiquitous entity has been a cornerstone of human civilization for eons. Throughout history, monetary systems have constantly evolved, adapting to societal needs and technological advancements.
Back in the day, bartering was the name of the game. Got a chicken but need a goat? No problem; find someone with a surplus of goats and an appetite for poultry, and—voila!—you’ve got yourself a deal.
Then came the shiny yellow nuggets, a.k.a., gold. With its durability, divisibility, and relative scarcity, this form of currency became the ideal candidate for a universal medium of exchange. (And let’s be honest: it’s also a whole lot easier to carry around a pouch of gold coins than a herd of goats.)
Fast forward to the modern era, where gold has been sidelined in favor of fiat currencies—money that holds value because a government says it does. It’s like saying, “Trust us, this piece of paper is totally worth a hundred goats!”
What is money?
Based on an article by the International Monetary Fund, money can essentially be…
- A savings jar. This allows you to tuck it away today and use it in the future.
- A value meter. It provides a common scale and lets you compare the prices of different goods and services.
- A shopping tool. It’s the very thing we use to trade when buying or selling items from each other.
“In a nutshell,” explains Robert, “money is a tool for trading time and energy.”
While this might seem like a philosophical take on money, solid economic principles back it up. According to the U.S. Bureau of Labor Statistics, there’s a direct correlation between the level of education (time and energy investment) and median weekly earnings (money).
What that means is, the more time and energy you invest, the more money you’re likely to earn. A doctoral degree, for example, will yield you a higher salary.
So instead of thinking of money as a mysterious concept or an unattainable goal, think of it as a form of exchange. It translates your efforts into a universally accepted value.
The Dawn of a New Monetary Era
Fiat currency is the money we all use today—the dollars, euros, and rupees stored as digitized data or tucked away in our wallets.
However, it doesn’t have any intrinsic value, meaning it’s based solely on the trust and faith we place in the government. It’s like a promise made on a pinky swear; it holds as long as everyone believes in it.
That’s where, according to Robert, bitcoin is more effective.
“It cannot be inflated,” he explains. “It’s a pure digital instrument, so it cannot be easily confiscated.”
It operates on a decentralized network and uses a transparent, secure ledger called the blockchain. The plus side is, it’s not tied to any government or entity, which means it’s immune to whimsical policies or political instability.
But the big question is: how can Bitcoin contribute to our financial abundance?
The intrigue of Bitcoin
Its popularity has skyrocketed since its inception in 2009. Keep in mind, though, that it comes with the risk of fluctuations and uncertainties, which many people have experienced.
So how does money work in this instance? Robert explains that it shouldn’t be looked at as an investment but rather as savings.
When you take money and put it into a venture with the intention of outperforming the market. There’s the anticipation of reward.
When you take money out of the marketplace and put it into a trust-minimized asset.
Bitcoin is similar to putting your money in gold—you “save economic energy into the future,” as Robert explains. Plus, it can be a potentially significant source of passive income.
The thing is, the allure of Bitcoin is undeniable.
“I am hoping through education and the monetization of Bitcoin to help nudge the world in that direction,” says Robert, “towards a world in which the individual is more free and the collective is more wealthy, cooperative, and harmonious.
And in your quest to understand money and, more importantly, make it work for you, Bitcoin may just be your golden ticket on this ever-going economic rollercoaster.
With that being said, there’s another crucial piece to the puzzle—your relationship with money. The way you perceive, feel, and behave toward money can be a game-changer.
Changing Your Relationship With Money
Here’s another question to ponder: how does money work when it comes to your relationship with it?
Because here’s the thing: your emotional relationship with your funds holds immense significance, be it with fiat currency, gold, or cryptocurrency. Interestingly, it’s just as critical as knowing how to attract money.
“Your money—and hence your life—is a reflection of your beliefs about money,” says Ken Honda, Japan’s Zen Millionaire and trainer of Mindvalley’s Money EQ Quest. Research has even shown that how you perceive money, consciously or unconsciously, can profoundly influence your financial behavior and outcomes.
“Money is the root of all evil” or “I don’t deserve wealth” are just some examples that can create a mental blockage. On the flip side, a positive money mindset can do wonders, attracting wealth and even offering up passive income ideas.
That’s why Ken advocates for money EQ.
What is money EQ?
Emotional intelligence, or EQ, generally refers to your ability to identify, use, understand, and manage your emotions in positive ways. And so “Money EQ” refers to your emotional intelligence when it comes to your monetary wealth.
“Money EQ is more important than Money IQ,” says Ken. Why? Because it’s about understanding your current relationship with money and having a healthy, balanced emotional relationship with it.
Firstly, this involves viewing your finances as a tool, not a measure of self-worth. And secondly, it’s about understanding the emotional triggers influencing your financial decisions and cultivating positive feelings around money.
For instance, those with a high Money EQ don’t fear or resent wealth. Instead, they feel gratitude for what they possess and exude confidence in their ability to manage and multiply their assets.
In this context, improving your “Money EQ” can help break free from negative beliefs that stop money from flowing to you. This, in turn, allows for a more abundant flow of assets into your life and enhances your ability to attract more by understanding its nature.
Remember what Robert said about money representing an exchange of time and effort? Ken echoes the same.
“Money is really energy,” he explains. It’s not how much you make or have that makes you wealthy. Rather, “it’s the energy in which your energy is given and received that determines your flow.” And that shows how wealthy you are inside.
Awaken Your Abundance
In the grand scheme of things, it’s not just about the money; it’s about living the abundant life you’ve always dreamed of.
If you aren’t willing to receive happiness and abundance, then no matter how much money you have and no matter what high status you attain, you will never feel happy and abundant.— Ken Honda, trainer of Mindvalley’s Money EQ Quest
Mindvalley’s Money EQ Masterclass with Ken Honda can help you with just that. In this free class, you’ll learn to…
- Rise above the negative beliefs,
- Make peace with your money, and
- Build the wealth you desire.
And more than 390 students who shared their success stories agreed. One of the students, Tracey Knight, a self-mastery coach and a proud Mindvalley member, has to say about her experience:
“This program helped me expand and strengthen my relationship with abundance, not just money. I was able to see how my relationship with money was reflected in many other areas of my life, including my business, health, and the relationships I have with those I am inspired to live life with.”
Money isn’t the evil you’ve been made to believe it to be. And with Money EQ, it has the potential to be your friend.