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Over the years, I have learned there are several myths about money that are not as obvious as they should be. Everyone has their own predispositions that influence how they save, spend, and earn their money. Today, I will share these myths and how to avoid being a victim of falling for these money traps!
When I was a kid, I grew up in a small town. We lived on an acre of land and had to frequently wash our vehicles because we lived on a dirt road. My father worked long hours and rarely took days off. Due to this lifestyle, I equated working hard with making money. I had no idea that this was not entirely true!
I’m not saying that hard work is not necessary, because it absolutely is. However, we all know those people who work harder than anyone else, yet they make little to no money compared to others. Take janitors for an example. I have known several hard-working janitors who could work circles around the company CEO. Yet on the pay scale, they are at the bottom of the totem pole. So does hard work equate to more money?
As I examined human behavior and financial strategies, I found an interesting fact about people who make the most money. Those who earn the most money are those who make their money work hard for them. They make their money work rather than working hard for their money. When their money is the one working, they actually make more of it. It’s the idea of working smarter, not harder.
Our views about money are shaped by many different things. They were shaped by our parents, our teachers, and other influential adults and friends in our lives. We lived through them and through their experiences whether we knew it or not. Our parents learned much of their money ideas from their parents and so on. These thought processes continue on in a repetitive cycle until someone breaks them. One change in the family tree can affect those below them.
Myth 1: Money Is Finite
When we think about money, many of us feel the only people who have money are the top 1%. They have most of the money and what is left is a finite amount that the rest of us work and fight for. Money as a resource feels like it is scarce.
Many of our grandparents lived through the Great Depression and now store money under their mattress to avoid losing it. Their experiences have shaped the opinions and views of money of their children and their children’s children. People who have lived through the Great Depression often avoid spending money on frivolous or expensive items. This fear of not having enough can create hoarder tendencies that can branch out into others in the family tree. This fearful idea of the scarcity of money can keep people from trusting to let their money to work for them.
The truth is, anyone who can control their spending and put effort into investing can reverse the scarcity mindset. By letting your money work for you, you can become wealthy if you control your spending – no matter your income level.
Myth 2: More Money More Problems
While many of us dream about winning the lottery, a similar number of us dread the thought of having that much money and responsibility. The more money and responsibility we have, the more stressed out we get.
Again, this is a misconception about money. While there may be more paperwork and responsibility due to having money, the amount of good you can do in this world should outweigh any negatives. Money does not need to have a negative connotation associated with it. Changing our pessimistic views can have a dramatic impact on the positive influence we could make with more money.
Myth 3: Wealthy People Are Men
The past certainly has a way of sticking with us mentally. The income inequality of the past is finally evening out. It’s no longer a man’s world in regards to finance. Many successful women have come up through the ranks and created small businesses that have taken over. Get rid of the male-dominated finance mindset and start creating the life you want. It’s anyone’s game now! Just ask Oprah Winfrey, Doris Fisher (GAP), Margaret Whitman (eBay), or J.K. Rowling (Harry Potter) who are all self-made billionaires!
Myth 4: Money Is The Root Of All Evil
Many of you reading cringed in the last article about the thought of becoming wealthy. Years ago, I would have had the same reaction. Growing up in private schooling, I was raised to believe that money leads to troubles. Chasing money is inherently sinful and it’s more honorable to be poor than to have great wealth.
Many people refer to money being the root of all evil by leaving out a couple of very important words from the quote. The quote they are referring to is from the Bible in the book of 1st Timothy 6:10 which states, “for the love of money is the root of all evil.” Over my lifetime, the love part is conveniently left out. Being wealthy is not sinful – loving money is. There is a big difference.
Myth 5: I Don’t Deserve It
This is similar to the money is the root of all evil premise. Many people are uncomfortable thinking about money or accumulating money. Comparing yourself to others can contribute to this thought process. That woman is smarter than me, she should be paid for. I don’t deserve to be paid well because I don’t have any skills. This self-defeating attitude about money can cost us our futures.
The truth about money is that the more of it you have, the more good you can do. The more you accumulate and the more it works for you, the more charitable giving and employment you can do. By being financially responsible, you can be a blessing to others.
Myth 6: You Need A Job That Pays You Twice A Month
Again, this myth was perpetuated to me throughout my youth. I was raised to finish college and get a good job with great benefits. The idea of owning a company never even crossed my mind when I was younger. The goal was to avoid risks and get a good stable job that would take care of me for years to come.
In the past, this was a great motivator for people because solid pensions still existed and people could lead secure financial lives. Unfortunately, pensions are a thing of the past and working for a company usually doesn’t pay as well as you would like. Job security is related to low rewards due to low risks.
Those who have been the most successful are those who have branched out of the corporate mindset and started up their own businesses. The higher the risk, the higher the rewards have been. While the rewards for some people have been great, others have gone bankrupt.
While a safe corporate job may be what you desire, don’t forget that without innovators and small businesses, we wouldn’t enjoy many of the things we have today.
Myth 7: Money Makes Everything Better
How many of you have thought, “if only I made more money, I would be happier?” Several studies have shown that more money does not equal more happiness after $75K a year. For more information, check out an article I wrote about money and happiness- Money CAN Buy Happiness!. However, the more you make after $75,000 a year – your happiness does not noticeably increase.
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It turns out, after our basic needs are met – food, clothing, shelter, adding extra things like name brand purses and large televisions do not increase our overall happiness for an extended period of time.
Money can make us initially happy by purchasing items, but that happiness quickly fades away when the excitement of the new item wears off. If you don’t believe me, do you even use the items you received for Christmas last year? The truth is, we quickly lose interest in things.
Myth 8: We Shouldn’t Talk About Money
There is an inherent uncomfortable feeling we get when we talk about money. Some of us would never even think about letting anyone else know how much we make. Money is a topic that should never be discussed with friends or other family members.
The problem with this ideology is we are preventing each other from learning how to handle money. If you are great at managing money shouldn’t we spread this information? If a friend is struggling to make ends meet, I would hope they would reach out to me for advice and guidance.
The reluctance to talk about money is doing us all a disservice. We share so many other ideas and motivation with our friends and relatives, why should money be any different?
Myth 9: I Don’t Make Enough Money To Invest
Investing is no longer only available to hedge fund managers and millionaires. You can now invest your spare change in the stock market if you wanted to! The truth is, no matter your income, if you control your spending, you can start investing at any income level.
Compound interest is nothing short of miraculous when you think about it. Your savings will grow exponentially without you having to work for it! Even Albert Einstein referred to compound interest as the 8th wonder of the world!
Don’t Let Your Money Biases Limit You
Each and every one of these myths limits you on a daily basis. When you start to change your thought process about money, doors will begin to open to you. I encourage you to view your money, and future money opportunities as a blessing, not a curse.
Continue to educate yourself as much as you can and get rid of your debt so you can start investing! Your compound interest is waiting for you! Also, if you have not yet subscribed to my blog, please subscribe by email below! I don’t want you to miss any posts! Keep at it my friends, you work too hard to be this broke!