You go to a tea corner, spend ₹10, and get a cup of tea. You transact cash for goods and services. However, you miss out on the possibility of gaining social money. The more social money you make, the more socially rich you become, which then increases your overall wealth by severalfold. In this article, we will learn what is social money and how to make and invest your social money.
Table of Contents
A. Credit, not Cash Drives Economy
a) Real-estate business
Even before a builder is able to construct the first house, it has to carry out several activities such as land survey, water survey, land acquisition, regulatory permission, project planning, project budgeting, project architecture, and so on. All of these steps requires expertise serious resource and manpower, and therefore money.
Then the construction process takes a lot of investment as well.
There is a tremendous risk of not being able to sell the homes after the construction. If there was no entity that took care of these capital risks, then no company would be motivated enough to invest so much upright in such a risky future return like real estate. Banks and investors come forward and offer debt(which is an advance capital given to an entity for producing and manufacturing, so that the company can return the money after selling the produced good, along with an extra return from its profit).
However, to whom do the banks or investors give debt? Is it any company? No, even though on paper, business plans, past credit histories, company financials, etc are checked, such debt approval often happens through social connections. Liaisoning officers of the company leverage their network, contacts, and sources to get the deal done.
However, the example of real estate is very high level, and common people do not get to experience such social games. Let us then take up a common example that you may understand more easily.
b) Grocery Business
Distributors supply goods to grocery shops. The distributor’s agents come to a shop and check what items are in demand, what items require replenishment, and which items are not selling and need to be taken back. They then not only supply the items but also arrange the items in the racks of the grocery shops. They also bring new goods and items, local items with higher margins. Distributors also find out the most suitable racks and placement for the items.
The entire supply chain of the grocery is driven by a credit system. Distributors place the items in the grocery shop, and the shop sells the items and pays the distributors. Again the amount of credit and the timeline of credit that a distributor is willing to give to the grocery shop owner depends more on the social relationships, rather than the volume of the business.
c) Service Businesses
Most of the service businesses, such as Doctors, Plumbers, Chartered Accountants, and lawyers get their clients from referrals and social connections. The increase in the volume, profit, and growth of such personal-service-based business is often based on the social interactions and social relationships of the service providers.
You take any facade of life and business, and when you analyze that in detail, you will always find quality social interactions, and relationship maintenance behind the success of any individuals and entities.
Why this article is about the salaried class?
Now these are all examples from the businesses. What is in it for the common people? What is there in social relationships for a salaried class? People in businesses are naturally better at social interactions and understanding social dynamics.
Salaried classes after getting their jobs focus on their performance, delivery, promotions, and on-site opportunities, and have to deal with several other factors like office politics, economic changes, the pressure of putting in more hours, EMI, work-life balance, personal life challenges, and so on. Therefore neither they find time, nor have any specific motivations to improve their social wealth.
Why bother then?
