Money is one of the most misunderstood aspects of our lives. Throughout my journey from financial struggle to wealth, I’ve discovered that money doesn’t care about effort—it follows value. This insight transformed my approach to wealth and prosperity.
When I first got married, I was a complete miser. My wife said I made her miserable with my constant focus on budgeting, cutting costs, and avoiding spending. I was trapped in scarcity thinking, believing wealth came from holding onto every dollar.
This mindset is incredibly common. Many people believe money is scarce, that there’s only so much to go around. They focus on reducing expenses rather than creating value. But no one shrinks their way to wealth.
Understanding What Money Really Is
Money is simply a man-made store of value—an efficient way to exchange value without bartering. When someone pays me, that’s their expense and my income. When I spend money, that’s my expense and someone else’s income.
This perspective shift matters because it helps us see money as a flow rather than a static resource. The goal isn’t just accumulating money (net worth) but creating value that generates ongoing cash flow.
I’ve watched countless people chase net worth while living poorly. Northwestern Mutual found that the majority of millionaires don’t feel wealthy because their money is locked up. They followed conventional wisdom to cut, eliminate, and defer—becoming “millionaires on paper” while living like paupers.
The Four Types of Expenses
Not all spending is equal. Understanding these four categories transformed my relationship with money:
- Destructive expenses: Borrowing for consumption that leaves you with debt but no asset
- Lifestyle expenses: Everyday costs and luxuries you pay cash for
- Protective expenses: Insurance, legal protection, and liquidity that safeguard your wealth
- Productive expenses: Investments that generate more income than they cost
Most financial advice focuses on cutting expenses, but productive expenses are how wealth is built. When I invest in learning, tools, or people that help me create more value, that spending multiplies my income.
The Lamb’s 10% Principle
One concept that changed my approach was Lamb’s 10% Principle. A wealthy man named Lamb would pay service workers 10% more than asked. Why? Because he understood value flows both ways.
When I pay someone more, they prioritize my work. They feel valued. They put in extra effort. This isn’t just generosity—it’s smart business. I’ve seen this play out countless times in my own ventures.
Too many people focus on getting the lowest price without considering the cost. A cheaper product that breaks quickly, a discount service provider who lacks expertise, or cutting corners on quality all lead to higher costs in the long run.
Living Wealthy vs. Being Rich
Benjamin Franklin said, “Wealth is not just the man that has it, but the one that lives it.” This distinction matters deeply.
Living wealthy means value-based spending—putting money into what truly matters to you. For me, that’s upgraded travel and quality accommodations. For others, it might be fine wine, cars, or experiences. The key is spending intentionally on what brings you joy rather than trying to impress others.
I once owned a Bentley because my partners insisted we needed to impress high-end clients. But it only attracted teenage boys and gold-diggers—not clients. Now I drive a truck with 90,000 miles because that’s what I prefer.
Value is preference. Value is perspective. One man’s trash is another man’s treasure.
The Real Danger of Inflation
If you’re not wealthy and don’t know the path to wealth, inflation crushes you. Wages rarely keep up with the rising cost of goods. My wife’s grandparents bought their house for the same amount it cost to replace their deck last year.
But for those with assets, inflation can be a friend. When you own real estate, inflation makes your fixed loan payment feel smaller over time while increasing your property value and rental income.
This is why focusing solely on saving money is dangerous. Your savings lose value while assets gain value.
Money as Unequal Exchange
The most powerful insight I’ve gained is that wealth comes from unequal exchange. When I provide a service that someone values more than what they pay me, and I value their payment more than the effort I put in, we both walk away wealthier.
I once helped clients save $35,000 in taxes for a $7,500 fee. They got more value than they paid; I got paid for knowledge I already had. We both won.
This is the essence of wealth creation—not taking from others but creating value that didn’t exist before. The more value you create, the more money follows.
When you shift from scarcity thinking to value creation, money transforms from something to hoard into a tool for building the life you want. That’s the true wealthy mindset.
