The Significance of Money

Armstrong Williams

8/9/2011 1:25:00 PM - Armstrong Williams

We live in a culture that is 100% monetized. Unfortunately just about everything is judged by money and the lack thereof. In this society a man’s character doesn’t necessarily determine his worth, but it’s the perceived amount in his bank account. Madison Avenue has done an excellent job of convincing society that you can only be happy if you have an abundance of material things. It’s a never ending procession of new gadgets and material things paraded before us on a constant basis. One of the great inventions of our times is the cell phone which is now in the hands of children which receive instant advertisements of goods and services which their parents more than happily purchase to satisfy their kids. The British philosopher Bertrand Russell, one of the great mathematicians and philosophers of the 20th century, wrote a book The Pursuit of Happiness. The idea was that you are happy when you are absorbed in some activity that you enjoy and respect. The example he used was the game of tennis. If you’re planning tennis to get happiness from the game, you won't find happiness nor will you win the game. Happiness will come if you love the game and play it with all your heart, mind, and soul. It’s the activity that gives you happiness, not the racquet and the ball.

Money, if properly used, can afford you happiness, joy, and allow you to do good for society. You can be generous with your family, friends, and people that are in need. Look at the wealthiest in this country who derive great joy and happiness from being able to help others. Money is a verb and not a noun. When I was in school when we were taught what words were. Noun, preposition, conjunction. When you got to the defining of verbs, we were taught that a verb is a word that means to work. Money is a verb, not a noun. The one thing that we must learn quickly and at an early age is that money is a verb and we must put it too work. If you are a domestic worker, blue collar, policeman, fireman, government worker, lawyer, accountant, whatever your profession or trade, occupation you must be able to put money aside. The first investment one should make is in an education. In many of my public speaking engagements, often it is the case with students that their main concerns are their student loan liabilities.

I see it totally completely and diametrically differently than the students. If you have student loan totaling over $50 -100 thousand dollars, you must capitalize what amount of money you would need to invest to get a return equal to your salary upon graduation. Whether its graduate, undergraduate, law , medical or terminal degree. If you finish with an undergraduate degree for example and you begin work at $60,000 yearly, if you were to capitalize that amount of money you would need to have a million dollars at 6% to yield you $60,000 yearly. So I tell students with an undergraduate degree that they are millionaires. Starting attorneys at major law firms today’s beginning salary are over $140,000 yearly, they are multimillionaires, for it will take over two million dollars capitalize for them to get a return of $140,000 yearly. Therefore a college degree and above renders you a minimum of being a millionaire today. If you have an asset of million dollars and you have student loans whatever they maybe, you have a strong asset to liability ratio. So student loans in real terms are insignificant based upon the returns derived from the asset created. What I also share with individuals is that the second investment after their degree or degrees is to buy a home. Shelter is fundamental to life. The greatest tax breaks in our complicated tax system are in home ownership. Not to buy a home is virtually a criminal act without actual jail time. You can purchase a home today with little or no money down. What you have in this home is a true direct tax deduction. The government basically subsidizes part of your mortgage payment through the interest rate deduction from your taxes; as well as every month you are gaining equity in your home. If the country has an inflation rate of 2.5 % yearly over 40 years your home value would have doubled. If you sell your home after having live there for two years and you’re single. You can sell the home and have a capital gains of up to $250,000 or $500,000 if married tax free. This is money in your pocket without ever paying any taxes to uncle sam from the sale. We truly live in the greatest nation that affords us unlimited opportunity and prosperity.

The third investment is life insurance. Every second we become older and the first sign of death is life itself. We are mortals, and one way of protecting our family and the assets that we have created is through life insurance. People need to purchase term life insurance as early as possible and maintain and add to this as their assets increase. In following these principles you can only be a credit to yourself, your family, and your nation.