Buying compact discs (CDs) used to be a thing. That’s how we bought music back in the 1980’s and 1990’s.
I spent a few thousand dollars on CDs throughout high school, college, and my early working years. One summer, I worked in a record store to earn money because my internship at a financial services company was unpaid.
For how much time I listened to them, CDs were a good entertainment value for my dollar, similar to a book or video game.
I listened to thousands of hours of music, critiquing different bands, memorizing lyrics, playing guitar chords, and searching for music with more complex sounds.
During all of that time I spent listening to so many bands and genres, it never dawned on me to start creating music myself. I was a music consumer and connoisseur, but nothing more.
What if I had spent some of those hours writing songs and practicing guitar?
By creating my own music, maybe I could have produced something of value that others might have enjoyed. Maybe my music creations could have earned a royalty income stream.
Probably not. But I’ll never know because I didn’t try. It was easier to listen to what others created.
Consumption vs. Creation
We are all consumers. We consume food, energy, information, toys, automobiles, homes, entertainment and so much more. How much we consume is based on where we live, our prosperity, needs, values, and thoughtfulness.
When we spend money to consume, sometimes there’s an economic value in return and sometimes there isn’t.
For example, when I buy gasoline for my car, it enables me to drive to work where I earn money to support my family.
But when I buy a CD or a piece of furniture, neither item provides any economic value to me. The CD plays music and that entertains me. The furniture is a place to park my butt after a long day.
Neither purchases make me wealthier. In fact, they both make me less wealthy.
What we consume must be created.
Exxon and Chevron create a product by extracting oil from the ground and refining it into fuel for our cars. They do this quite profitably.
Musicians write and record songs for us to listen to. Good music earns royalties.
Farmers grow food which eventually ends up in our grocery stores and on our dinner plates.
When something is created that is of value to others, the resulting economic transaction creates wealth for the creator.
Reducing consumption (to save money) and increasing what you create (to earn money) are ways to enhance your ability to build income streams and grow wealth.
The Creation Mindset
Now, I’m not saying you should go write a power ballad (←great list) to put on Spotify. The creation mindset can be applied broadly to many aspects of our lives.
You can invest your money into assets which grow in value or produce an income stream to create more wealth for yourself.
Another example is your career. Ask yourself, are you creating value for your employer or just drawing a paycheck?
By value, I don’t mean you’re nice to have in the office or you work hard to complete tasks reliably and on time.
I mean, does the work you do provide a quantifiable value to the customer? Does it drive revenue and profit for your employer?
Or are you in more of a support role?
Another form of creation is thought leadership. Are you somebody who thinks critically to solve problems, or do you carry out the ideas of others?
A more extreme example is energy consumption at home. Most all of us pay the electric company for the power we use.
What if instead of simply drawing power from the grid, you install solar panels on your roof or a geothermal system in your backyard?
Any excess energy you create is sold back to the power company. You become an energy creator instead of only a consumer.
Entrepreneurs have a creation mindset. They look at how to add value to a potential customer. They find what problems exist that can be solved with a better product, service, or technology.
It’s not about selling any old material object. It’s about creating products and services that make our lives better.
The taxi systems sucked. Uber created a better way to purchase a ride using existing technologies.
Blockbuster charged too many late fees on movie rentals. Netflix created a new way to deliver the same product without charging late fees.
People have short attention spans but still want to know what’s going on in the world right now. Twitter was created to fill that need.
That kind of ambition isn’t practical for most of us, but small opportunities to create are everywhere. Look in the most obvious places.
My Personal Transformation
I used to watch a lot of sports. When I met the future Mrs. RBD, we watched cable TV together almost every night.
During my free time before we had kids, I read a lot of personal finance and investing articles on the internet. Many of these were written by ordinary people, not journalists.
At the same point in my life, I was looking for a way to earn extra money. I thought, what if I started writing investing-related articles and publishing them on the internet?
RBD and my side business were born. Now I read fewer online articles and produce them instead.
My weekly writing schedule requires more evenings in front of the computer and less in front of the TV. As a result, we cut our cable subscription and watch far less HGTV and other easy-to-watch shows that would queue on our DVR player.
This freed more time to write personal finance articles and grow my presence on the internet. As my writing improved and the popularity of my blog grew, it started earning more money.
This transformation from consumer to creator has enhanced my ability to earn money outside of my day job helping to grow our family’s wealth every month.
Accelerate Your Wealth Trajectory
As with any change in mindset, results may not come immediately. My transformation took a solid year to gain traction and longer to realize that my mindset had shifted.
It begins by changing the way you think about everyday life.
Start with your money. Are you spending too much money consuming? Can you funnel more of your money toward assets that create more wealth?
In your career, focus not only on earning a salary for yourself. Think about how you can create more value for your customers and drive revenue for your employer. They’ll both notice and reward you for it.
If not, someone else will.
Then think about what you’re doing with your time.
Is consuming more sports and TV helping you to accomplish your savings goals? Probably not. Can you slice off a fraction of your TV time each week and focus on creation instead?
Are your talents being utilized to their potential?
The masses consume and are happy to give their money to the creators.
Somebody will deliver what they crave, be it music, useful devices, a needed service, sports entertainment, handy crafts, compelling videos, funny tweets, sexy Instagram posts, online courses, interesting blog posts, or a helpful invention.
Will it be you?
Disclosure: The author is long CVX and TWTR stock
Photo via Wikipedia Commons CC Public Domain published in the U.S. before 1923 and public domain in the U.S.
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