The Sates of Money Series: The Concept

Take a second and remember back to those elementary school chemistry classes. In the first week or so you probably learned that every element has 3 states: solid, liquid, and gas. This is a very simple and foundational concept in chemistry, and similarly a foundational concept to this blog series.

Money, just like any element you find on the Periodic Table, takes on three distinct states. You can earn it through hard work and ingenuity, you can save it in a bank or investment account, or you can spend it on the things you want or need. Each of these states offers the frugal minded an opportunity to maximize the value of every dollar.

Let's dig deeper...

In the earnings state you must be diligent. The key here is to know your deductions, your company benefits, and most importantly you need to know how much you owe in taxes so you don't overpay in withholdings each pay period (big tax returns are not cool folks).

The savings state is driven by two mottos, "Cash is king" and "He who has the gold makes the rules". Simply put, when you have money available for savings there is an opportunity cost to you holding the money. This is why banks pay interest, because you would have no incentive to take the money out from under your mattress if you did not receive some form of reward.


The spending state is my favorite. Not only is it fun buying new things and going interesting places, but this is often the most challenging state, because the opportunities come and go so quickly. In the spending state you are looking for two things: a discount on your purchases, and a method of payment that will provide you with a return through cash back or loyalty points. 

In the coming parts of this series, and as a more global theme behind this blog, I will walk you through the ways to benefit in each state. I also hope we can learn from each other in the comments section below.