A lot of people have false beliefs when it comes to money. These false beliefs have long been in existence, and with financial education not regarded as an essential subject; they have been established in many minds. These ideas have turned to myths as no one can tell where or from whom they came from. Because of this, you may have ended up believing these myths about money which results in a subconscious altering of our thinking. These myths affect how you make money decisions, thereby preventing you from creating abundance but luckily once you know the root is their inaccuracies you can banish them from your mind for good. Let’s get into those myths right now!
Myth #1: You should avoid debt at all costs
This here is not only a myth but an actual lie. Yes, banks are created to feed off our expenses by generating money based on interest. However, you have to understand that you cannot attain abundant wealth by using only your own resources which are knowledge, time, and money. Every billionaire recognizes that he or she must leverage other people’s time, knowledge and money too and, the truth is, other people’s money is generally borrowed with interest.
Here’s an example of how interest can help you get ahead. Let’s say you start a new project and take on a loan with interest to fund your endeavour. Yes, you will have to make interest payments on the loan but if you can get your project off the ground and make more than enough profits, these profits should easily cover the interest fees meaning that paying back this debt won’t be an issue.
World billionaires have been doing this for years because debt is not always a burden; it is often a powerful money generating tool. This is why almost all major businesses have debt on their balance sheets because this is leverage they can use to get ahead. Therefore, sidestep the myth that you should avoid debt at all costs if you presently think this is the case!
Myth #2: Your home is your best asset
This is arguably the most controversial money myth out there however, it must be said that your home is not an investment. A home is necessary as it’s where you and your family live and once the mortgage is fully cleared it will be out rightly yours however, until then, this home will be pulling large sums of money from you in the form of mortgage payments for years to come. This is aside from the fact that you’ll also be covering a host of other housing bills as a homeowner.
Of course, I’m not suggesting that people stop buying homes for themselves. If the money is available, you definitely should get yourself a home. However, that purchase shouldn’t be considered profitable for the simple reason that it takes money out of your pocket instead of the other way around. The good thing about owning a house is that it offers you a comfortable place to live and some housing stability but that’s about it.
Remember, whatever doesn’t put money in your pocket is not an asset as far as investments are considered, and your house is one of those things.
Myth #3: Gold and other metals are safe havens
It should be a general fact that all investments come with risk; some with higher risks than others of course and the best ones offer the highest returns for the lowest risk. Many people view precious metals as an asset class that falls into that category but this may not be entirely true. Last year, gold recorded its worst week in the market in thirty years. The supposed “safe haven” joined the global market collapse that saw investors pulling their money out in desperation.
Spot gold dropped 2.9% and ended the week with 8.6% in losses. The other metals that joined gold in the bear market were silver, platinum, and palladium. The fact is, these precious metals are only suitable investments because they have low risk, but there is no such thing as a safe haven when investing.
This may seem inconsequential, but it’s just an example of how bad something so good can become. A prudent investor has to learn to surf the market wave and stay afloat in all circumstances. The event saw precious metals being stripped of their traditional safe-haven status on a large scale. However, a credible investor already knows that no asset, including gold, can guarantee any investor profits in perpetuity.
Myth #4: Cryptocurrencies will make you rich
Yes, it’s possible to get wealthy through cryptocurrency, but then, it’s also very possible to lose every penny you invest. How can these two statements be true? Well, as I do so well, I’ll explain. Similar to many other investments, bitcoin and altcoins are accompanied by a host of risks that could thwart your investment dreams.
The crypto market comprises of specific risks that aren’t so prevalent in the usual financial markets that incorporate more common assets like bonds and stocks.
The crypto industry is fraught with scams and frauds who promise investors high returns, which are nothing but a fool’s gold peddled as legitimate blockchain projects. If you buy into this myth, your chances of escaping the brutal losses that your predecessors suffered are next to zero!
Generally, the success of crypto assets depends on if they eventually gain widespread adoption and for presently all the coins in circulation, there is still a long way until this asset class is seen as being sustainable.
Myth #5: Money managers can beat the market
People like Warren Buffett and Peter Lynch have attained great wealth by selecting individual stocks however for every one or two investing moguls who have used this strategy to get ahead financially, there are millions more who have failed. You see, beating the market is something very few investors can do and there are two primary reasons for this.
The first, relates to investment fees. For example, assuming you follow the popular advice of investing your money into an S&P 500 index fund, at best, the performance of your investment would be identical to that of the S&P. Hence, when investment fees get deducted from your returns, you won’t even be level with the market hence you’ll fail in toppling its level of returns.
The second reason people, even fund managers, fail to beat the market is that there are simply too many factors that affect the market on a daily basis. Anything from a pandemic to a natural disaster could send the market reeling and unless you have a crystal ball, understanding how you can avoid these impacts is impossible which again makes the task of beating the market an uphill battle.
So, unless you’re Nostradamus and can see into the future, the notion that people can consistently beat the market is simply untrue.
Myth #6: Rich people are evil
This myth must have its origins in sentiments like “It’s not right that rich people live in excess abundance while my family has nothing”. The truth is, wealthy people think and act differently than poor people. You can be angry and complain all you want or make the wise decision to learn what the rich know and unlearn what the poor teach.
Poverty is and forever will be a big issue for many because financial knowledge is not widely taught and has little chance of ever finding its way into our educational systems. While they should, people generally don’t discuss how and why the rich are the way they are. People just buy into the myth that they are evil and must have done something terrible to attain their wealth.
The way some people hold on to this myth really shows that they do not realize that this particular myth was created to keep them trapped in poverty.
Best believe that an individual can be both wealthy and good. Whenever you join the clique of people who put “the rich” and “evil” in the same sentence, you subconsciously kill your drive for wealth for the simple reason that no one wants to be evil. In everyday dealings with people, you’ll find as many wicked poor people as you would of the rich!
Get it out of your head that wealth comes from being evil. Yes, there are evil rich people, but the same holds for the poor!
Myth #7: Saving isn’t worth it in small amounts
If you ask me, when it comes to saving, many people are their own biggest enemy and thinking you saving small amounts is futile is a terrible mindset to possess. Unfortunately, many people think you need to be making a ton of money to start saving but this is simply untrue. You don’t get rich to save, you should be saving to get rich.
When saving, the main thing is simply beginning. You just have to start with whatever you have, no matter how little. As you progress, it gets easier, and with the correct information and advice, there’s no limit to how far you can go. As you get more comfortable saving, you also begin to sharpen your capacity to invest.
Saving has more to do with getting started and persistence, and diligence. It has very little to do with having a lot of money. However, if you earn enough to start big, of course, do it, but under no circumstance should not having huge funds be the reason you don’t save.
Myth #8: You should avoid all risks when it comes to your money
Simply put, all successful entrepreneurs have to take risks at one point or another. If you have a chronic dislike for risk-taking, you might as well start rethinking whether you’re meant to be an entrepreneur.
An infinite number of entrepreneurs at one point or another had to take risks to keep their careers moving. However, taking risks does not imply that you should go into business blindfolded. Taking risks is not synonymous with being stupid and expecting positive results. Risk-taking as far as your money is concerned involves hard work and careful planning. Part of the advantages of not being afraid to take risks with your money is that you’ll not have to ask what-if’?
Jeff Bezos once said that he knew that by 80, he wasn’t going to have any regrets. This is because he understood that even if he tried and failed, it wouldn’t be a regret but a lesson. For him, regret comes from not trying something and wondering what could have been if he had.
Myth #9: Living below your means will make you rich
When it comes to the saying “you must live below your means” the devil is truly in the details because on the surface this sounds like great advice but is it really?
If you take a critical look at the most ardent individuals who follow this financial mantra, you’ll find that many of them still struggle financially and this will likely go on for the rest of their life unless they change their mindset.
You see, living below your means may mean saving $10,000 a month or saving $5 a month, both indicate you’re spending less than you earn but one will set you up much better financially than the other.
Therefore, go beyond the surface of this saving and aim to be someone whose got a sizeable gap between their income and expenses so that you can enjoy all the benefits of being financial well-off!
Myth #10: You don’t have to analyze your financial habits
Having a better financial record goes beyond earning more money and if you believe that you don’t have to analyze your financial habits, change that belief right away. When it comes to your money, understand that you need organization, proper budgeting, and accountability regarding your expenses and income. You have to scrutinize how you handle your money.
The fact is, financial skills have nothing to do with making money; it’s about handling it. No matter the size of your paycheck, if you don’t analyze your dealings with money, you’re doomed. Yes, generating cash is the first step in your journey to financial freedom, but if you refuse or fail to analyze your financial habits, you’ll never get there.
Thanks for reading!