Young people, you want to be rich, but you already are beyond your imagination.
You measure wealth in currencies, cryptocurrencies, investments and things that are interchangeable into such currencies: stock, timberland, bonds, real estate, art, cars, etc. This is what people typically default to when they think about wealth.
But money is a currency, which is something that can purchase or exchange other stuff. And there are a lot of things that the older you get, the more money you would spend to exchange into: while young people have these things in abundance.
The younger you are, the richer in time you are. And the phrase “time is money” is literally true, as people willingly pay to free up time, whether in the form of time-saving devices, freelancers, gig economy workers, etc.
This is such a trite phrase that I hesitate to start with it, but when you consider that people like billionaire Nike founder Phil Knight, in the closing pages of his autobiography states that he would give everything up to do it over again, or when Warren Buffett, speaking to students, says, “you want to be me, I want to be you,” then you begin to realize to a very rich old man, a young person’s life could be valued in the billions of dollars.
As you grow older, the price you’re willing to pay for time increases exponentially. Although I’m not as rich as the aforementioned gentlemen, what I would give to go back 10 years. Even 5 years. Probably in the tens of thousands, if not hundreds of thousands of dollars.
Out of all the “alternative” sources of wealth I’m about to list in this post, time is the only thing that can’t be purchased or created. It can only be utilized where it exists, or exchanged into, by money or financial instruments – i.e., spending money to use time that you already have, but are burning every second. Maybe this makes it the most precious.
Time also has the characteristic that by default, adding time to money causes money to grow. This is why when you’re young you might hear the phrase “time is on your side”. Well, it really is. Someone who’s 27 literally has 10 more years for their investments to compound and grow than I do.
This is a source of wealth that is often overlooked, because it is really hard to measure, unlike money or time.
Options, or opportunities, are a form of wealth that work in the background, and do not manifest themselves until they’re exercised. And young people have an almost infinite array of Options at their disposal, as a function of having more time, energy, boldness, less responsibilities/lifestyle drag, than older people.
This is hard to explain, but when I say they do not manifest themselves until they’re exercised, it’s because it’s hard to know how they will create value to you until you actually use them.
But, consider that us older people – well, all people, spend a lot of money to travel, read, learn languages, move to different cities, obtain knowledge, attend educational institutes, physically train, etc. etc., all of which create Options, which at the opportune time or place, can create money or jobs, or be exchanged for time and other higher-level forms of wealth, like relationships, wisdom, love, happiness, and so on.
The younger you are, the easier you can pick up these invisible options. You can learn things quicker when you’re young. You have less opportunity costs and responsibilities. You have more energy. You likely have a larger social network than someone whose been working for, say 20 years in the same industry and town.
Many people who appear lucky, are in fact just awash in the wealth of invisible options. This is not a great example, but say someone buys 80% of the lottery tickets, and wins. Was he lucky? Or did he buy a lot of options? This is kind of a bad example because the cost of buying that much will likely be higher than the payout, but I hope you get the idea.
More thoughts on why options are really hard to quantify and measure, but are still there in the background. When people say “right place at the right time”, they are ignoring the fact that you can engineer this kind of ‘luck’ by picking up a whole bunch of invisible options.
Two college graduates with the same intelligence level and achievements: one job is in a stable, blue-chip company, the other in a fast-growing startup. The first job is located in an old, industrial city. The second is in a coastal, high-priced one. The two jobs pay the same.
Right now, I would bet that the competition for the second job is higher, despite it being more expensive to live in the coastal city. I would even wager that possibly, college graduates would accept a slightly lower salary to take the second one.
This is because the value of the myriad options embedded in the second job is enormous, hard to quantify, but still intuitively there. As you get older, the cost of those options becomes so astronomical that it is hard to justify their potential value. I would like to think I could take an opportunity like that, given the same scenario. But I might not. Ten years ago, I definitely would have.
This is the raw stuff from which both options and money/financial instruments are created. Energy is costly to obtain and generate, but as with all of the aforementioned, way more abundant when you’re young.
Without energy, one cannot create or have created, money or financial instruments. Even in the case of generational wealth, someone in the distant past had to have exerted such energies to create a fortune.
Energy diminishes over time, both within a lifetime as well as within the span of a day. But similarly to time and options, its value increases as a person ages. Younger people are awash in it. In the case of my young daughter and others her age (4), it is perpetually pumping through their veins, requires no warm-up, and is converted without any entropic loss into sheer joy and full speed runs at the crack of dawn. Again, what I would give to have that kind of energy again: tens of thousands, maybe even hundreds of thousands of dollars.
Look at the number of ultra wealthy people buying blood transplants or other fountain of youth-type stuff. Energy is undoubtedly a form of wealth, and young people are awash in it.
The thing about these forms of wealth, is that they are all interchangeable with each other. When money is exchangeable into time, options, and energy, then the obsession that people have with accumulating only money at the expense of energy, time, and options is probably a little misguided.
You can cultivate energy and knowledge to create other forms of wealth. You can use money to purchase options in the form of more options, energy, knowledge, to create other forms of wealth.
And above all, time must be utilized wisely as this is the only thing that can’t be created or purchased.
In this way are young people bestowed with wealth beyond their measurement or imagination. And lacking knowledge or wisdom, so are they also dismissive of them.
Of course, there are higher-levels of wealth that cannot be strictly exchanged into or purchased using money, time, options, or energy. The previous sources of wealth are necessary, but not sufficient to gain things like relationships, love, wisdom, happiness. But I’m concentrating only on those sources of wealth that act almost as interchangeable currencies with each other.
At the end of it, I would wager that both Warren Buffett and Phil Knight would consider me a young(er) man. And that’s why I’m writing this down, so as not to forget..