15 Money Secrets They Don't Teach You In School

The school system is designed to keep people poor and mediocre. It was never designed so you could become rich and live a life full of prosperity. It was designed to raise employees that are obedient and never dream big. And if you want to change that programming, you'd better watch until the end of the video because no one is coming to save you.

Okay, here are 15 money secrets they don't teach you in school. Welcome to a Lux. Money loses value over time. Money has three important attributes: a medium of exchange, a unit of account, and the most important one, a store of value. Let's explain each of these in a short sentence.

So medium exchange means that money has to be fluid and easy to exchange for goods and services. The unit of account aspect helps people to identify how much a thing costs compared to another thing. But why would people accept to trade banknotes for goods and services instead of seashells, for example? Well, because of the third attribute: money must also be a good store of value, which means it keeps its worth over time, so you can save and spend it later.

And we all know that the third attribute isn't really present anymore, and the cost of that is high inflation. So, for example, if in 2022 the price you paid for a dozen eggs was $2.86, in 2023 you're actually paying $3.27—a fourteen percent increase. If you look at this table which tracks the price of eggs from 1980, well, things look even worse. Now, some will tell you the average salary has also increased over time, which is a fair argument, but that does not solve the store of value dilemma.

So if decades ago saving money was an option for retirement, now this strategy will only make you poor. And this leads smoothly onto our next point: saving makes you poor. Money is a tool.

Okay, it's not a trophy. If you're simply stashing it away in a savings account, you're treating it like a shiny object to be admired from afar when really it should be on the playing field scoring points for your team. Allow us to explain. So with savings, yes, you're preserving your money and maybe even getting a tiny bit of interest from the bank. However, it's hardly enough to beat inflation, which eats away at the value of your money year after year.

Investing, on the other hand, is how wealth is created in an era of fiat money, and understanding this will put you ahead of those who still don't get it. Stocks, bonds, and real estate are the most common forms of investments. The goal is growth and the strategy is patience mixed in with calculated risk-taking. The real clincher here is compound interest.

When you invest, your money can earn interest, and then that interest earns interest, and so on over time. This snowballs, leading to exponential growth. Yes, investing has its risks, but with some financial knowledge and strategy, you can mitigate those risks. Diversify your investments, hold for the long term, and understand your risk tolerance.

And if you follow and apply all these steps, you might one day have a seat at the big kid table. And the big kids, well, they perfectly know that the central banks control everything. Think about the central banks as a lifeline for the economy—a built-in feature that is there by design.

You see, every dollar, euro, yen, you name it, is created by a central bank, whether we're talking about the Federal Reserve or the ECB. Understanding how these institutions operate is key to unlocking your finance self-awareness. They not only print money, but they also manipulate consumer behavior because they control the money supply. They control your life and how and when you spend your resources.

So because you want to preserve your wealth, you've got no other choice but to play by their rules. Central banks manipulate the money supply through a number of tools, the most common ones being open market operations, changing the reserve requirements, and changing the discount rate. Through these instruments, they nudge banks, businesses, and ultimately us individuals to either spend, save, or invest.

Understanding this is powerful because this economic machine depends on the unawareness of the citizens. The Invisible Hand, as Adam Smith called it, only our situation is centralized and not invisible at all, which means the free market concept does not exist in our economy.

Alright, so pause this video and re-watch this part and dwell on it for a little bit. And then let's move on to the next money secret that they don't teach you in school: the difference between credit and cash. So first and foremost, cash is king. This phrase has been imprinted in the minds of many, and for good reason. When you possess cash, you maintain ultimate control over your finances.

Cash allows immediate transaction closure without any future liabilities. It reflects on your liquid assets, or how much you truly own at any given moment. On the flip side, though, credit is a powerful tool only when wielded wisely, and most people don't use it wisely at all—not even the government. It is the trust that allows one party to provide resources to another party wherein the second party does not reimburse the first party immediately but promises to either repay or return those resources at a later date.

Think about credit as your financial reputation. It showcases your ability to handle debt and can assist in facilitating large purchases, building businesses, and managing unexpected expenses. However, credit comes with an underlying cost: the interest. Most people have no idea if they can afford to pay it.

And if you want to master the rules of finance like a pro, well, you know how to play with both. Credit, like cash, is a tool, and if you know how to take advantage of it, you have nothing stopping you from building that generational wealth.

Money is tied to value. Naval Ravikant, one of the most successful angel investors in the world, once famously said, “You will get rich by giving society what it wants but does not yet know how to get at scale.” Value creation isn't a one-time windfall; it's a process, a constant cycle of identifying needs, providing solutions, and repeating at scale.

And when it comes to distributing this value, the magic lies in making sure it reaches the right places, and you do that by building trust, having a great product, and doing good marketing. The cycle of value creation and distribution fuels not only individual prosperity, but also societal growth as well. And in the grand scheme of things, the ones who master the rules are not those who accumulate wealth at the expense of others but those who enrich themselves by enriching society.

This is all based on the law of supply and demand, which is key to unlocking 99% of all financial wisdom.

A monthly salary equals addiction. In his book "The Bed of Procrustes," Nasim Taleb said it better than anyone ever could: the three most harmful addictions are heroin, carbohydrates, and a monthly salary. Now, you might wonder why he included a monthly salary alongside substances that have direct physical impacts. Well, it's because of the physiological dependency that a fixed income can induce.

It breeds a certain complacency, an aversion to risk-taking that will limit your ability to reach your full potential. Just as it's easy to fall into a routine, it's easy to become addicted to the security of a monthly salary. But remember, significant wealth rarely comes from routine. Instead, it often is a result of taking calculated risks, of embracing the uncertainty of entrepreneurship, investments, and innovation.

It requires stepping out of the comfort zone of a regular paycheck and exploring the vast, sometimes volatile, but potentially rewarding realm of financial opportunities. In the grand scheme of wealth creation, a monthly salary is but one instrument, a starting point perhaps, but rarely the final destination. The path to wealth requires you to dare to innovate and to venture where others hesitate. Remember, you'll never get rich and remain sane at the same time by working for someone else.

And in the future, because of the disruptive effects that AI has and will have on the job market, everyone will be an entrepreneur, so you better start preparing accordingly.

How banks work: We made a video about this subject that you absolutely need to watch once you're done with this one if you haven't already. If people fully understood how banks work, they would engage in more ethical practices. But like with all things they don't teach you in school, there's a reason for that. This is precisely why you need to take personal responsibility for your education, Aluxer.

And we built the Alux app specifically for people like you—people who are determined to level up and create a life that they're happy to call their own. It's like a high-performance coach right in your pocket. We pay the neuroscientists, therapists, and coaches the big bucks to distill their wisdom into daily sessions and learning packs. Just 10 minutes a day consistently is enough to completely change your life. If you haven't already, go to alux.com/app to get your journey started today.

Alright, back to the video. So if you can make an effort to understand how banks work, for example, you get to avoid plenty of situations where you pay unnecessary fees and stupid amounts of interest. Self-education pays off big time. Banks prey on the fact that most people have no idea how to manage their finances and have a deep lack of understanding of how credit tools work.

So if you'd like to get the full picture, start queuing up that video we just recommended: how to keep your money from flying out of your pockets. There's the quote from the famous movie Fight Club that explains this in one direct but deeply meaningful sentence: "Advertising has us chasing cars and clothes, working jobs we hate so we can buy what we don't need."

And yes, Tyler Durden is right here—the moment you step out of the door of your apartment, everyone is trying to sell you something. That's the whole purpose of marketing and advertising: to persuade you to the point where you can't imagine your life without a certain product.

But what happens after the impulse-buying dopamine wears off? You're left with something you probably are not going to use very often. There are things that will upgrade your life and things that are nice to have, and understanding the difference is the key to building and preserving your wealth.

Why money needs to flow through the economy: If fiat money becomes stationary, well, that's bad for both the hoarder and the economy. Money needs to move around an economy because it enables business activities, consumer purchases, and investment opportunities. Think about it like this: when you pay for a service, buy a product, or invest in a business, you're moving money from your possession to someone else's.

This movement is vital because it allows businesses to earn revenue, pay their employees, and invest in growth, which in turn helps to stimulate the economy. At the same time, money also needs to leave the economy. This happens when businesses or individuals invest in foreign markets, buy goods or services from other countries, or pay off foreign debt.

These actions help to prevent too much money from accumulating in one place, which can cause economic problems like inflation. They also help to create diverse investment opportunities and strong international trade relationships. So it's important to understand this because, for example, if you've got cash flow, you can continue to reinvest your profits and multiply the revenue in your business.

And this also applies to investing: if you want to make money, you need to first be prepared to let go of it and have it multiply out in the economy.

How to budget: Budgeting isn't just some dull number-crunching exercise; it's the best practice for achieving financial freedom. It's all about making your hard-earned money work for you and not the other way around. It's about being the boss of your money, if you will, planning your future expenses and turning your dreams into reality.

With good budgeting skills, you're actively working toward your financial goals. The fact that schools overlook this vital skill is a bit like forgetting the secret sauce in a recipe. It leaves you unequipped in a world that's all about money management. When you learn how to budget, you actually own the keys to your financial kingdom.

Imagine a world where everyone is in control of their finances, where personal debt is the exception, not the rule. Most people are stressed because of their finances, so fixing this issue would definitely make the world a happier, less stressed-out place.

How to negotiate deals: Negotiation requires confidence, but know this: a Luxor life itself is a great negotiation game, and if you don't get good at it, at some point you're going to have a big handicap in every situation. Like buying a car, getting a new job, even signing a lease, negotiation can make a huge difference.

The idea of negotiation, sure, it can seem daunting. Many people are used to accepting the first offer they see. But it's crucial to remember that prices and salaries aren't always set in stone. The first offer is often just a starting point for discussion. When you negotiate, you have the potential to save significant amounts of money.

You can negotiate a higher salary, a lower price for a car, or even a better investment rate on a loan. These savings can add up over time, putting more money in your pocket. But it's not just about saving money; negotiation is also about understanding the value of things and asserting your own worth.

So why is negotiation such an important money rule? Well, it's simple: negotiation gives you more control over your financial situation. It allows you to push for better deals and to ensure you're getting the most out of your money. It's a key skill that can help you navigate the financial aspects of life more effectively.

So the next time you're given a financial offer, remember that it's not necessarily the final offer. Don't be afraid to negotiate. Okay, it's a practical skill that can have a big impact on your financial health. Remember, you are not paid what you're worth; you're paid what you ask for.

Tax avoidance versus tax evasion: You've probably heard the term tax avoidance or tax evasion thrown around. They might sound similar, but they're as different as night and day, and confusing the two could land you in a whole heap of trouble.

Tax avoidance is all about using legal means—like deductions, credits, or exemptions—to reduce your tax bill. It's totally above board and a smart financial practice. Basically, you're playing the game by the rules, but you're playing to win. On the flip side, tax evasion is like trying to sneak out of a restaurant without paying the bill.

It involves illegal practices, such as not reporting income or reporting expenses that didn't occur. This isn't just frowned upon; it is flat-out illegal and can lead to penalties, fines, or even jail time. So in a nutshell, understanding the difference between tax avoidance and tax evasion is like knowing the difference between driving within the speed limit and flooring it down a busy street. It's just too bad they don't teach this in school.

How the money supply expands and contracts: Here's the simplest way to explain this: when the money supply expands, there's more cash flowing around. Banks have more to lend, businesses have more to invest, and generally, people spend more. However, under certain situations—like pandemics, supply chain issues, and wars, for example—this growth becomes fragile. If there's too much money chasing too few goods, you get, you guessed it, inflation.

That's when prices start climbing and your hard-earned money doesn't stretch as far as it used to. On the flip side, if the money supply contracts, things can get a little tough. Banks tighten up their belts, businesses might cut back, and people often rein in their spending. It can slow down the economy, and if it's too severe, you could end up in a recession.

So why should you care about all of this? Well, because right now we're in the middle of a money supply contraction, and some say in a recession. Understanding how the money supply changes can help you make smarter financial decisions. If the money supply is expanding and inflation is on the rise, maybe it's time to think about investments that can keep pace with inflation. If the money supply is tightening, it might be a good time to stash some extra cash away for a rainy day.

It's all about staying one step ahead, and understanding the money supply gives you valuable insight into the economy's rhythm.

How to fight inflation: You know those times when you walk into your favorite grocery store and it feels like the prices have skyrocketed overnight? Well, that's inflation sneaking up on you, and it can feel like you've walked into a surprise boxing match with your budget. Now imagine that scenario but on a much larger scale, impacting not only just your grocery bill but also your rent, your utilities, your car payments—basically everything. Well, that's high inflation, my friend, and it hits hard. Everyone has felt it over the last few years.

So make sure you check out our recession videos to learn some more about it and get yourself ready. And finally, what you do for money.

School creates factory workers and good employees. When they ask you what you want to be when you grow up, they expect you to respond with a job title—say lawyer or doctor—and you get a round of applause. Say YouTuber or professional gamer, and they'll laugh at you. This creates a mentality that the only way to make money is for someone to employ you and for you to be a good little worker bee.

It promotes staying in your lane, staying small, and never going for that unbeaten path. And there you have it, Aluxer: these are 15 money secrets that they don't teach you about in school. And at this point, we're curious to know what, in your opinion, is the reason why stuff like this isn't taught or prioritized in school. Drop your answer in the comments below; we're very curious to hear your thoughts on this.

And with all that said, let's wrap up this video, shall we? If you found this information valuable, don't forget to return the favor by tipping us with a like and a share. And as always, thanks for watching, Aluxer. If you'd like to learn some more, check out this video next.