Why does Naval believe "Money is just a credit that transfers time from the past to the future"?

Hey, that's a great question! Naval's perspective is indeed profound, but breaking it down makes it quite understandable. It challenges many people's traditional views on money.

Let me try explaining the three core parts of this statement in down-to-earth terms: "Past Time", "Credit", and "Future Time".

Step 1: Money = Your "Past" Time Invested

Imagine you work hard all month and receive your paycheck at the end. Where does this money come from?

It's exchanged for the past month of your time, energy, brainpower, or physical effort. You invested a slice of your life creating value for society (e.g., coding, designing, delivering food), and society (through your employer) gave you "money" in return.

So, every dollar in your wallet is essentially a "condensed" or "stored form" of your past time. It’s like depositing your time into a bank and receiving money as your proof.

Simple example: You spend 8 hours working and earn $800. That $800 represents your labor from those past 8 hours.

Step 2: Money Is a "Credit" Voucher

Now, you have $800 in hand. This money—whether cash or digital—is pretty useless on its own; you can’t eat or drink it. Why is it valuable?

Because it represents credit—an agreed-upon “IOU” recognized by society.

When you receive $800, it’s like society saying: "Hey, we acknowledge your 8 hours of contribution. We owe you something of equal value. This 'IOU' (money) is proof that you can redeem it from anyone in society for equivalent goods or services they provide."

This “IOU” is universally accepted, making it transferable. You don’t worry that the coffee shop downstairs won’t take your employer’s cash. That’s the power of money as a form of “social credit.”

Step 3: Transferring Time to "The Future"

Here’s the crucial step. How do you use this “credit voucher” representing your “past time”?

You use it to buy other people’s future time.

Dining out: You pay, essentially buying the chef’s time to cook your meal, the server’s time to bring it, and the farmer’s past time growing the ingredients.
Taking a cab home: You’re paying the driver for the future time spent driving you.
Hiring a home renovator: Your payments buy the crew’s future months of time and expertise.
Investing in stocks (a deeper layer): Buying a company’s stock means purchasing the future time of all its employees to create profits for you. You’re using your stored past time (money) to "hire" thousands to work for you.

See? Pretty amazing.

Through work, you package your past time into money (a form of credit). When needed, you redeem that credit to access other people’s future time for your benefit.

The entire process is a time transfer: from your past into your future.

Why This Perspective Matters

Understanding this changes how you see money entirely:

Earning ≠ the end goal: Making money isn’t about hoarding numbers—it’s about gaining future “time freedom.” More money means greater power to command time (yours and others’) later. You become freer and less bound to trade future time for survival.
Time is the ultimate wealth: Money is merely a time-measuring and transfer tool. This shifts focus to valuing your time more and using it efficiently to exchange for valuable credit (money or influence).
Seeing investment’s essence: Investing isn’t gambling. It’s deploying stored time (capital) to acquire higher-quality "future time" (promising companies/assets)—making money (others' time) work for you.

Hope this clarifies Naval’s wisdom!