Money is so Abstract...it almost doesn't exist

[mb196]

Not so long ago, people carried physical Savings books to banks to record their deposits and withdrawals.  Instead of going online and seeing a bunch of dots on a monitor, people safeguarded those little booklets and often referred to them or show them to other family members with pride as proof of what they had in the banks.

Lately I've been thinking that my stache is just a series of numbers that I get to see in my monitor (and my iphone) from time to time.  If for example, I neglect to list one of my accounts in my Will or Estate Planning, and suppose I also do not list any beneficiaries at the time the account is open, the asset can very well end up in limbo when I die and it's like I never owned it.  Years of effort and savings can evaporate due to a single oversight.

This post is not about bringing back physical savings books, but rather about how abstract money and our staches are.  Decades ago, while in college, I worked for a family company and during bonus time, the owner was known to have one-on-one conversations with staff.   He was generous and made small loans (between 1K and 5K).  Well, Mr Owner was known to say, "that debt you had is now forgiven.  Don't worry about it".

I think of same concept in reverse and wonder how abstract our savings are for those of us without stacks of Gold in their basements.   Something to think about.....

[swick]

Well worth a watch: The Extra History Series on Paper Money:https://www.youtube.com/playlist?list=PLhyKYa0YJ_5CL-krstYn532QY1Ayo27s1

[mozar]

A great book to read is Debt, the first 5000 years. For most of human civilization we used credit systems.

[I'm a red panda]

If for example, I neglect to list one of my accounts in my Will or Estate Planning, and suppose I also do not list any beneficiaries at the time the account is open, the asset can very well end up in limbo when I die and it's like I never owned it.  Years of effort and savings can evaporate due to a single oversight.

Wouldn't the exact same thing be true if you lost one of your savings books and your family didn't know to try to track another one down?

[tarheeldan]

I can print out a bank statement and it's no less abstract than a savings book. Those funds are also legal tender, and merchants have to accept them as payment. They probably won't accept the gold that's (not) in my basement.

The whole concept of a store of value is relative though, there is no absolute. One of my favorite graduate courses in economics was History of Economic Thought, which included a section where we followed along at different attempts in history to find an absolute driver of prices or value. No such thing. Precious metals are only valuable if we treat them that way, they're not intrinsically valuable. Same with labor - you can toil all you want at useless things that no one will value. Money, and the way prices work, are pretty cool concepts when you really think about them.

[Ryland]

It's that amazing! It's just a lubricant for doing what you want in life.

I love taking the emotion packed word "money" out of my vocabulary and replacing it with something like "enabler." It really helps when talking to new people about FI.

[Nothlit]

If for example, I neglect to list one of my accounts in my Will or Estate Planning, and suppose I also do not list any beneficiaries at the time the account is open, the asset can very well end up in limbo when I die and it's like I never owned it.  Years of effort and savings can evaporate due to a single oversight.

In most states, I think this would result in your account being placed onto an "unclaimed property" registry, where your estate/heirs could search, find, and claim it. Still requires someone to actively go looking for it, but it's not just totally evaporated.

[Mmm_Donuts]

A great book to read is Debt, the first 5000 years. For most of human civilization we used credit systems.

+1. That book was a fascinating read.

[infogoon]

It's that amazing! It's just a lubricant for doing what you want in life.

I prefer to think of it as the Universal Solvent, dissolving barriers between myself and what I want or need.

[MrsPete]

If indeed money is abstract to most people, I'd say that's by design.  Design by those who control the banking industry; after all, if money seems somewhat "unreal", it's easy to spend it all.  And who most benefits from that? 

[Live Free]

It's that amazing! It's just a lubricant for doing what you want in life.

I love taking the emotion packed word "money" out of my vocabulary and replacing it with something like "enabler." It really helps when talking to new people about FI.

Love the idea - As you said, it's amazing how loaded the word "money" is. Changing the word you use for it helps change your understand/relationship with it.

[BAMxi]

This blows my mind regularly. How much of our time, blood, sweat and tears are poured into racking up numbers that only mean something because we all agree that they do? It's like we all constructed this thing to give us all something to do (work), but now we're all saving it up so that we don't have to do that very thing anymore. If I thought about this long enough, I think my brain would melt.

[Dropbear]

Reminds me of the guy who took $5000 out of the bank so he could play Monopoly with his kids...  using real money.

The hypothesis is that the increasing intangibility of money in contributes to financial illiteracy in contemporary society.

Would you play the game differently if the money was real?

[driftwood]

I think playing Monopoly with real money would make me really really mad. You never get an option to stop rolling, you don't get to choose where you land or the accommodations, which means you're forced into random situations where you could be paying ludicrous amounts in rent/fees... the only way to not lose the game and the real money is to take more risks than you would in real life hoping you come out on top.

Monopoly is fun but the point isn't to find a good balance, it's to purchase enough real estate and upgrade it so that you can force your opponents to pay you more and more money each time they're forced to be there until they are completely broke.  Maybe applicable to the business world if your goal is to learn how to destroy everyone else, but not really Mustachian either.

[Greenback Reproduction Specialist]

I like to think of it as debt society owes me, I put 'x' work, now society owes me 'x' equivalent in work or goods. It is a way to keep track of how much value you have contributed to society, and in relation how much society owes you in return. It truly is the fruit of your labor, though not always as satisfactory as growing your own fruit tree to have goods for sale or trade. But, dollar bills don’t rot or spoil during storage, or run the risk of being eaten by pests. Remember money was just created as a way to accomplish the same thing as trading and bartering, without having to spend so much time trading and bartering.

This concept seems to be lost on most people though....