What is money at its core? Money is wealth, and it is earned by the perceived creation of wealth.

Let that soak in. When I am paid, it is because I have done, created, organized, or developed something in such away that another person identified it as valuable.

When I teach or tutor, I am reorganizing information or presenting new information in such a way that someone else is finally able to understand it. For that, they pay my employer money. My employer then uses some funding to keep up it’s software and servers (as I tutor online) and then provides some of that income to me directly for my work. I continue to work for them, rather than merely tutoring in person for cash only, because of the stability, safety, anonymity, and flexibility that online tutoring provides. Therefore, I am willing to give up a portion of the possible wealth for the minimized risk.

Risk is worth money. Inversely, it is worth paying someone money who can minimize your risk.

Thus, my primary gig as an insurance claims representative serves to minimize risk. You pay for insurance so that you do not have to bear the financial risk of the loss or of the liability you create for yourself. Rather than waiting until I’ve saved up $300,000 and put it into savings before I drive for the first time, I can take out an insurance policy for a much smaller monthly rate, and still have $300,000 in liability protection (and whatever other 1st party coverages I select). In the end, everyone pays more than if we just sat on cash until we had an accident, because on the average, most people don’t make claims on their insurance. When you pay for insurance, you pay for your future claims and for the people that service them. (About 70-85% of auto premiums actually go to payment of claims.)

Can you imagine directly arguing with an injured person how much money they deserve for the injury you caused them? To most of us, it is worth paying a monthly fee to outsource that sort of conflict to a knowledgeable third party. (Who has two thumbs and is a knowledgeable third party? This guy!)

My wife is a bank teller. Oddly, it is the same job I have. She holds your money to keep it safe until you need it. For that, she gets some of your money (which comes from interest paid on lending).

We create wealth and we don’t even manufacture objects. We reorganize information, sit on piles of money, and provide it to customers when the rules (that the customer signs off on) dictate that they are allowed access to it. For that service, the customer pays us a fee, which allows us to feed our family and pay interest on our debt so that some other banker can also earn an income.

When I was in retail sales, customers were paying, not only for the product, but for my ability to point it out to them. They were also paying me for my availability, in other words, for the time when no customers were in the store, just so that I would be there when they wanted to shop. This is why online shopping is so much cheaper on the average, as we do not need as many humans to keep the inventory secure and to answer our questions.

When people are sad about the existence of self-checkout lines, they see the cashier as providing a service of value to them. When they like the self-checkout line, they don’t see the actions of the cashier as worth the effort of waiting in line and paying slightly more (on average) for their services. (I notice that the people who are sad about self-checkout lines did not use valet parking when they arrived at the store; nor are they using full-service gas pumps.)

Money is a perception of wealth, and we give it to those who are perceived as creating value.