I won’t lie. The “Aha!” moment I describe below has me wanting to slap my younger self right upside the head.

However, it perfectly illustrates the essence of how a producer spends money vs how a consumer spends money.

Spending Like a Producer…As a Child

On a recent James Altucher podcast, and he told a story that perfectly captured the essence of how a producer spends money. Episode 532, if you are interested.

The thing that made the story so fascinating was that it was from his childhood.

When he was a kid, he had a paper route making about $100. He also was obsessed with chess, and wanted to get better. So he would take $70 of that $100 and pay a mentor to play and teach him chess.

And there it is. That’s the essence: investment.

That’s exactly what separates the producer from the consumer with spending money.

What was his goal? Get better at chess.

How does he achieve it? He uses money as a tool to invest.

He was investing in getting better at chess.

You may say, “Chess is just a game. He was spending it on a game. That’s not investment.”

Yes it was, or at least the concept is the same. He was learning how to use the tool of money to make progress. To get better. To produce. He was investing in his ability to produce in the chess world.

Naturally, now I’m asking myself why he was so aware and mature at that age, and I wasn’t. At that age, I was spending my money exactly as any consumer does: distraction. I was dropping it in the video arcade, the soda shop, and the record shop.

The Essence is Investment

The rub is that investment rarely pays off instantly, or even quickly. Investment usually requires delayed gratification.

That’s what makes investment so hard for most consumers. We are a culture of instant gratification and distraction. Give it to me today, tomorrow at the latest. Yesterday is even better.

Investment takes many forms, but it’s the key to spending money as a producer.

Do you want to get unstuck? Break out of mediocrity? Make changes in your career?

Use your money to invest, not distract.

I’m thankful that I now understand this concept, and we’ve been able to reap rewards. My family spends a good portion of our money investing in all sorts of things like our health, experiences, business, new ideas, learning, financial instruments, etc.

But I can’t help wanting to go back and kick the 12-year old me right in the ass. Imagine how much farther along I would be now if I would’ve thought like James did as a kid.