By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section
martin@martinmerritt.com
“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog
As you can tell, I love talking about health law & litigation issues, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.
______________________________________________________________________
Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like. –Will Rogers
Money is power. The people who say, “money is power,” have no idea how right they are. Cash flows like an electric current, which we call “power” (as in “the power’s off.”) We even use the same slang “juice,” to refer to both electric energy and the power to influence people in “charge” (we call them that, because they have power.) I could play with words all day, but I have bigger concerns. I have kids in college and I am trying to teach them well.
Having represented wealthy people and poor people, the first thing I would tell my kids, is it sucks to be poor. If you don’t believe me, just let the world find out you don’t have enough money to make ends meet. If you don’t starve, you at least get hit with all kinds of penalties, like late fees and higher interest. If you get arrested, you stay in jail, rather than getting bailed out. In short, without “juice,” you end up constantly getting your ass kicked by life.
Everyone can’t be wealthy, but it is possible at least, “not to be poor.” My first thought is that “not being poor” is the same as having “security,” and so not spending all you make, should be “job one” which any kid should learn.
Have you ever thought about how electricity works? No one does. Like money, it is all around us, but not one in a thousand can tell you what it is and how it works. Cash “flows” like electricity and it has similar “utility.” That’s why we call the electric bill a “utility bill.” But cash you earn will flow straight through your fingers, if you don’t take charge and make it behave. Which is exactly how electricity works.
I may have this a little wrong, but if you want to make electricity, all you have to do is spin a magnet close to a coil of copper wire. If you want to make a lot of it, get a really big magnet and a lot of wire. The electrons in the copper are being pushed one direction by the “north” pole of the spinning magnet, then pulled back by the “south” pole. This creates an A/C alternating current of electrons flowing through the wire, which is why it is called “electricity.”
But this “back and forth” alternating current of power flow doesn’t just end up sitting in your electrical socket waiting to be used. You either must use electricity when it is created, or it must return to its source to be depleted, which completes the electrical circuit. If there isn’t a circuit, it won’t flow.
There is one exception to the “use it or lose it” rule. You can store energy, at least for a while, in a battery. (You can even be a “battery,” if you’ve ever rubbed your shoes across a carpet in winter, then touched a door knob, then you know.) Which illustrates, energy stored in a battery is not a permanent, natural state, and so stored energy is always trying to get out, to dissipate, to leave you, and find some way to return to the universe.
What the hell does electrons have to do with teaching kids about money? Money is always trying to leave. Being “destitute” is more or less the natural state. You have to go out and spin the wheel to make cash flow. Then you have a different problem, how to make it behave?
“Wealth” is different than “income.” Wealth is cash flow that you don’t use immediately. Like a battery, it is a store of power you didn’t use, which also makes wealth largely invisible. There is a difference between acting rich and being rich. If kids use their money as fast as they make it, they might light up incandescently, but only for a short time. If they buy expensive meals, people can see how well they are doing, but they deplete wealth. You literally “can’t have your cake and eat it too.”
At least not all of it. But you could still eat some of it and have some of it left over. That is generally how you avoid being poor.
This is also the irony we can see in the song in Fiddler on the Roof “If I were a rich man.” (Tevye gleefully would blow it all ostentatiously. And then he wouldn’t be a rich man very long.) Which is the lesson here. When we spend our cash flow, we might feel “elated” like Tevye, but it doesn’t last. When you don’t spend all of your cash flow, you feel more “secure.” (I think that is why they call investments “securities.”) Which brings me to my final point on “how” to teach kids not to be poor.
There are two kinds of people, “spenders” and “savers.” Savers just place a higher value on security, often at the expense of having any fun at all. This is what Oscar Wilde had in mind when he said, “Show me a man who lives within his means, and I will show you a man that lacks imagination.”
I would tell my kids, then, there are two ways to live a “poor” life. I have represented people who saved every penny, amassed a fortune, and I don’t think they ever had a day of fun in their whole lives. Most of the financial advice I read, suggests that you should strive to save a certain percentage of your income, and enjoy your life with the rest. If you can’t do that, cut your expenses. Save “something.” And don’t touch it.
If you do not have a natural “saver’s” mindset, this is a perfect time to be a phony and “fake it until you make it.” Act like a saver until you are one. If you don’t have three to six months of expenses in savings, you are “poor.” Stop acting rich, until you are not poor. And that’s a good enough definition of what “wealth” is: having some “security and peace of mind.” It certainly won’t hurt, if you give “catastrophe” fewer chances to find you.