Life's Wealth Secrets

What is the key to happiness? I guess many of us ask ourselves that simple, yet so complex question. Some time ago I had an epiphany in the blue sea in the beautiful country of Greece. As I was floating in the sea, the crystal clear water giving way to the sandy bottom of the ocean beneath us, the waves dandling us, I thought ‘Could life get any better?’

Just thirty meters from us, on the beach, a group of newly rich showing off their wealth, ordering cocktails and waving their electronic gadgets. We were in forbidden territory; the adjacent beach belonged to a luxury hotel.

If someone asked you what you consider rich, what would you answer? I am not referring to health, friends, family, or other areas of life that are truly enriching. Rich in terms of finances. I for one am really struggling with the concept of “being rich”. What does it mean to be rich? Do you need $/€/£ 1 billion, $/€/£ 100 million, $/€/£ 1 million, or $/€/£ 500,000?

A financial windfall is, unfortunately, a rare occurrence. Fortunately so is being given too little change. But every day we are exposed to the psychology of finance whether we are aware of it or not. Every time you check your savings account or mortgage rate, you either awe or not. Some might feel disappointed over the low interest rates they receive for their savings, while others feel happy about the extremely low mortgage rates they just bagged when signing their mortgage contract.

Fantastic you might say, but what does any of this have to do with finance? Of course people sometimes fall for others who are not into them. Books have been written on the subject, magazines talk about it every week and give endless tips on how to find the right partner and  better dates. There are even apps such as Tinder trying to ease these difficulties and make it more enjoyable. And the weather is an endless topic we can all relate to. So how does the psychology play a role for my financial decisions?

Throughout our lifetimes on this beautiful planet we have developed ways of viewing and reacting to the world that determine our path in life, how hard we work, our relationships and our daily reactions and emotions.

This might sound strange, but finance is, to a great extent, psychology. The way we view the world around us, our decisions and the resulting behaviors whether we buy or sell, are happy with our interest rates or not, feel taken care of by our bank are all driven by the psychology of perception.

Imagine a fun day out with your friends enjoying a great brunch including some champagne, good food, and all that for free. Not one penny that you need to part with; thanks to, let's call it, the social side of capitalism. If you think it sounds fantastic, so do the young and the elderly.

Don't you often feel like there is too much month at the end of your money? There are so many who feel likewise. Feeling that you never have enough money, aren't earning what you deserve, and that somehow everyone else is better off. It ain't fair, is it? But what if the reality is different from our perception.

It is part of human nature to under- or overestimate our own situation. It is difficult to grasp the world in its entity, thus leaving us to draw our own conclusions about reality. But reality is sometimes surprisingly different.

What is it that we here at Captain Finance and Warren Buffett have in common? Besides a shared interest in finances, we, just as Mr. Buffett, appreciate the value of money and want to get the maximum use from a product we acquire and own.

Money is something hardly anyone wants to talk about and yet people are highly interested how wealthy they are in comparison to others. Generally speaking, what does it even mean to be wealthy? My personal take is that wealth is more than money. Wealth is life. Wealth is what you experience and who you meet every day, your ideas and thoughts and those of others.

We are well educated, have numerous skills, expertise and knowledge in a variety of areas, but still quite a few are struggling with financial knowledge. Yet, in order to become financially independent, the most important thing is to master our finances and understand the relationships between having money and growing money. Financial literary as it is also known as, is, just as any other expertise, experience, interest, and access to the resources that make us more financially savvy. Unfortunately, the reality is still rather sobering.