For years I thought a dollar was a dollar. Then I learned that some dollars are worth more than others- not because of what they can buy, but because of when and how you earn or spend them.

The first time I realized this was when I was in my early teens. My mom told me about business expenses.

Pre-tax money is worth more than post-tax money

My mom crafted handmade jewellery and sold it at fairs around Scotland. I'd help out on the stand. Come lunch time, she'd take some cash out of the till and give it to me to go buy a sandwich. A business expense.

The £3 we'd just earned from a customer would buy me a sandwich priced at £3. The person standing next to me in the queue also pays £3 for their sandwich. But the sandwich costs them more.

They work an office job on a salary of £4,000/month. Of that, the taxman takes £1,000, leaving them with £3,000 in their pocket.

They're still spending £3 on a sandwich, but they've paid £1 tax on that £3, where I haven't. When they leave their office to go around the corner and buy a sandwich, it's with their post-tax money. They had to earn £4 to buy that £3 sandwich. It costs them more.

Whenever you can legally spend pre-tax money, it’s worth thinking about, because every untaxed pound stretches further. You'll be saving a substantial percentage from going to the taxman.

That lesson from my mom taught me that timing and taxation matter. But there was another, subtler truth I learned later: time itself taxes your money too.

A dollar today is worth more than a dollar in the future

Another principle that might've been obvious to everyone else but me, is that money always loses value over time.

I'd always known things were 'cheaper' in the past. Grandparents buying houses for 6 months' salary in today's money, chocolate bars for a few pennies and the like.

What I hadn't realized was that it wasn't just my grandparents it applied to, it was me too. It should affect medium term decisions over a few years. It is not just over whole lifetimes that the effect can be felt.

A dollar under your pillow buys a Coke today. Next year, it won’t. Inflation quietly eats its power.

What this means though, is that your savings must earn more than inflation. Otherwise your money is worth less and less with each passing day.

In an era of high inflation and low interest rates many have parked their money somewhere earning less than inflation. Low risk they say. Well, no. Your money is guaranteed to be worth less in the future.

Likewise, if your salary doesn't increase by more than inflation, you are earning less every year.

And just as time erodes value, ownership multiplies it.

A dollar earned from your own business is worth more than a dollar in salary

A job is selling your time and skill to an employer for dollars. When that employer no longer needs you, you part ways. You no longer get their dollars and they no longer get your time.

You have accrued value in the employer's company that they keep. You've developed a product for them that they can keep selling, you've been shipping orders that has increased their profit, you've run marketing campaigns that keep attracting customers.

Capitalism demands that the value you created for the company is greater than what they paid you. Not only has that value created cashflow for the business, it has increased the value of the business itself as an asset.

As an employer owning 100% of a company you are both earning dollars in cash and building an asset. Should you one day decide to stop working on the company, you've both earned all of those dollars over the years as its employee, and you now have an asset that you can sell to someone else.

A business that generates hundreds of thousands of dollars a year is both a salary for the owner and an asset worth millions of dollars. A job paying hundreds of thousands of dollars a year is just the salary.

Money isn’t just about how much you earn. It’s about when you earn it, how it’s taxed, and who owns the value it creates. Once I saw that, it helped me to make solid financial decisions- the kind that have lead to great outcomes for my family and me.