The Lies We Are Told About Money
When we are young, most kids get their financial advice from their parents, or in rare cases from their school.
My philosophy on financial advice is to only take it from qualified sources, yeah everyone knows you should save money and pay your bills on time but outside of this common sense advice (that nobody seems to follow anyway); you really shouldn’t be getting your financial advice from your friends or family unless they are where you wanna be financially.
Why would you want money advice from people who don’t save, don’t budget, and aren’t millionaires? If you want an average bank account then take advice from average people but if you want an extra-ordinary bank account then you need to get your advice from extra-ordinary people.
Anyway, here are some common lies we are told about money…
#1. Renting Is Flushing Your Money Down The Toilet
Honestly, I understand the mentality behind this one, the logic is: Why keep paying someone for something you are never going to own?
The answer is because in the short term, you don’t want to be saddled with a large mortgage payment. Why? Let’s say you are trying to get a business off the ground and that business has a large operating cost while not turning a huge profit yet.
Well you really don’t want to be trying to support your business expenses while also being obligated to pay a substantial mortgage payment every month, this is a recipe for disaster.
In the short term the smartest thing to do is keep your costs low everywhere else that isn’t your business, that way you don’t have times where all your money is spent and you need to take out loans.
Another reason you don’t want to own a home too early even if you don’t have a business, is because if something breaks in your apartment then you can just call the landlord, but if something breaks in your house, you not only have to pay for the tools to make the repair but you also need to invest your time into repairing it yourself unless you want to sink more money into paying someone else to do it.
A house is usually a depreciating asset, unless you are really smart about buying houses in locations where the value will go up but if you have the skill set of a house flipper then you probably aren’t hurting for cash and can disregard this advice altogether.
Long story short, renting is not a bad financial decision, and in many cases it’s the right one to make especially if you are thinking of starting a business.
Even if you have a career and can afford to buy a house, the longer you rent and save your money, the bigger the down payment on your house can be which will get you a better price and smaller mortgage payment.
#2. You Need To Work Hard / Put In Long Hours To Make A Lot Of Money
Well that’s one way of doing it, but it’s not the best way, if you want to earn a lot of money without having to work hard for your whole life, then you need to be smart with your money.
Ways to do this:
- Save your money
- Invest your money
- Find the places where you waste the most money so you actually have money to save and invest
- Create a business that is capable of scaling and generating a passive income
If you just do these four things and nothing too fancy, then there is no reason why you would ever be poor again.
Don’t mistake this as me saying that none of this takes hard work, it really does but the difference is doing these things will require less and less work over time.
When you first try to tackle one of these things, there will be a lot of work involved at first, because you need to do research and then implement it (most important step), and then you need to wait for it to gain traction.
Learning to save, invest, be more efficient with your money, and run a business all take a lot of time and experience to get off the ground but nothing will make you rich like these things can.
#3. Money Can’t Buy You Happiness
Why do people say this? It can totally buy you momentary happiness!
Money can give you freedom, allow you to travel, eat good food, stay at nice hotels, buy you so many entertainment options, and support whoever you want like family or friends.
Money can shield you from any medical bills, monthly expenses, sudden expenses, and repair/maintenance costs. This can take away so much unnecessary stress in your life and make you much more cheerful.
Now notice at the beginning I said momentary happiness, this means you can’t trade money for long lasting happiness, if you try and do that then you will end up with an addiction.
Addictions begin like this, you need to buy something that’ll make you happy, this can be anything; a drug, clothes, video games, food… eventually the amount you usually buy to make yourself feel good now becomes “normal” so you’re not getting that little dopamine hit of satisfaction anymore.
After a while you need larger and larger amounts of what you like just to feel good until you have an overdose, gain weight, go bankrupt, or die.
So as you can see, money, if treated correctly, can buy you short term happiness. But you are in charge of finding long term happiness internally and outside of monetary satisfaction.
Never underestimate what money can do for you, but don’t treat it like it will somehow create happiness out of thin air either.
#4. Money Is The Root Of All Evil
The actual quote is “ the love of money is the root of all evil.” which is to say, being greedy and envious leads people to do bad things. It has nothing to do with money itself.
Even if there were no currency, people would still be trying to find underhanded ways to raise their status above others. Power struggles have been occurring since the beginning of time.
Money is just a tool, it is the medium through which value is traded. Back then, the only way to get supplies you needed to live was to trade random things.
If you needed apples, you could ask all the apple farmers if you could trade your wheat for it, this would lead to bartering where both people try to determine how much of one thing should be traded for the other and it took forever.
So that was a major problem, another one was: What if nobody wanted to trade their apples for your wheat?
Well now you have no way of getting some apples unless you traded the wheat for something the apple farmers wanted. Again all this bartering took forever.
So humans invented currency, it is something that everyone in a society recognizes as valuable and anybody will accept it for a trade. This is why money is something good, it really allowed trade to be simplified and our society grew as a result.
We shouldn’t believe what anybody tells us about money, you wouldn’t ask your grandma to identify what your rash is, you’d ask an expert.
So treat money advice like you would medical advice, and seek expert advice or the reasons behind certain beliefs.
Originally published at https://forgefinancialfreedom.com on November 9, 2019.