If You Don’t Know Money, You Need to Watch this Guy in a Turban

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Slaking my thirst for personal finance knowledge usually meant running to blogs and podcasts. But lately, that has changed. I now imbibe far more personal finance knowledge via YouTube videos than blogs and podcasts. And one of my favorite personal finance YouTubers is a guy named Jaspreet Singh. Check out his recent video on The 10 Laws of Money.

The Ten Laws of Money

Do Jaspreet’s ten laws of money make sense? My initial reaction when I first watched this video was “yes.” But let’s look a little deeper into each law and see if that initial reaction rings true.

Money Is Emotionless

Agreed. Your money will not kick and scream if you ask it to do something stupid. Nor will it woo-hoo and fist pump if you ask it to do something smart. In other words, your money doesn’t care about you. It will just as happily bring you to financial ruin as it will bring you to financial nirvana. In order to spend wisely, you must develop a functional financial compass, so to speak. If your financial compass is out of whack, you will spend foolishly and you will end up miserable and broke.

Money Doesn’t Reward Hard Work

My first job out of college was for a mom-and-pop company that did spray stucco. My job was to man the cement mixer and make sure the guy spraying the building never ran out of cement. For six dollars an hour and no benefits, I came home every night covered in cement dust and physically destroyed.

Thirty years after college, I was a data analyst and my job was to sit at my kitchen table in my underwear and peck away at a laptop. For this “grueling” work, I was paid more than 30 dollars an hour. Plus, I got great healthcare and dental benefits, a nice 401(k) plan with a nice company match, and I was routinely rewarded with bonuses and gift cards for hitting mildly challenging performance benchmarks.

I worked far harder under far more disagreeable conditions in my early 20s than I did in my early 50s. And the only reason old Mr. G had it a lot easier than young Mr. G is that old Mr. G developed the ability to work smarter.

Jaspreet couldn’t be more right. Employers have a soft spot for smarts. Do something that relatively few can do (i.e., write complicated SQL queries) and employers will compensate you well. Do something that a lot of people can do (i.e., put concrete mix and water in a cement mixer) and employers will compensate you poorly.

Money Hates Sitting Still

This is Jaspreet’s way of saying that dollars are as horny as rabbits. They love making more dollars. Just give your dollars the right environment—a low-cost stock index fund sitting in an IRA or 401(k) makes them particularly amorous—and your dollars will be procreating 24/7 on your behalf.

In 2019, our dollars procreated to the tune of $28,000 in dividends. Throw in capital gains and our collection of dollars swelled by another $170,000 last year. So, yes, money does indeed hate to sit still.

With No Risk Comes No Return

This law dovetails rather nicely with Jaspreet’s previous law. Money hates sitting still, but it will be far more amorous in a risky environment than in a safe environment. Throw your money in a low-risk bank CD and it will procreate a little. Throw your money in a far riskier S&P 500 fund and it will procreate a lot.

Money Is a Game that Can Be Learned

Can’t argue with this. Anyone familiar with this blog knows that I was a financial moron up until my early 40s. But that dismal affliction was corrected rather quickly once Mrs. Groovy introduced me to Dave Ramsey’s The Total Money Makeover.

Now, I’m not saying that the money game can be mastered in a weekend. But if you devote a half-hour a day to learning about money, you will become financially competent in six months. And if you remain just as diligent about honing your money knowledge for another four or five years, you will likely become a financial rockstar.

Negative Minds Repel Money

Oh, man, I love this. Jaspreet and I are kindred spirits. If you live in America, have a sound mind and body, and aren’t being physically restrained from doing anything financially constructive, you have no one to blame but yourself if you’re struggling financially. Simply put, if you’re the typical American, your biggest financial nemesis is your mindset. If you avoid the diseases of one-quarterism and privilege envy syndrome, you and money will be best buds. If you don’t, money will hate you and you will have a very hard time keeping it around.

What You’re Worth on Paper Isn’t What You’re Worth in Cash

Jaspreet nailed it. When the Great Recession came in 2008, the value of my portfolio and home fell precipitously. The value of my emergency fund (i.e., savings account) didn’t fall at all.

Real wealth hinges on liquidity. The more cash you have the more real wealth you have—wealth in the immediate sense that you have money to pay your bills, and wealth in the long-term sense that you can ride out any financial storm that comes your way and won’t have to sell stocks and property at fire-sale prices to survive.

Protect Your Assets

Agreed. One of the primary indicators of financial competency is controlling for the fickle finger of fate. And how does one do that? Insurance. If you don’t have the proper insurance (i.e., health, life, auto, and home), you’re disrespecting your money.

Act Your Wage

When I was younger, I bought far too often to impress. I had to have the “right” clothes, the “right” car, the “right” amusements, and the “right” zip code. Had I acted my wage rather than my ego, I would have made much smarter spending decisions, and I would have escaped the dreariness of financial mediocrity a lot sooner than I did.

Diversification Isn’t Always the Right Answer

Not sure about this one. I will say this, though, when I lacked concrete employment skills, I sputtered along career-wise and had a hard time rising above paycheck-to-paycheck living. Once I developed solid database skills and became somewhat of an SQL guru, my career trajectory and money management skills dramatically changed for the better. Was this a coincidence? Or is specialization the key to standing out and making headway in a hyper-competitive economy?

Final Thoughts

Okay, groovy freedomist, that’s all I got. What say you? The sage Jerry Seinfeld once quipped that in order to gain moral wisdom in a multi-racial society, one needed to “look to the cookie.” Well, I say in order to gain financial wisdom in a complex global economy, one needs to “look to the turban.” Do you agree? Or do you find my high praise of Jaspreet Singh to be a little misplaced? Let me know what you think when you get a chance. Peace.