Many people believe wrong things about money, what we could call myths, and it is a possibility that you also believe some of them and you must eliminate them completely to progress financially.
Either because in our society or our countries financial education is very little, it is something that is never taught in schools, or because we have a very easy tendency to keep repeating things over and over again without knowing if they are true or not …
We end up with certain myths about money , certain things that we believe to be true and that are there in our subconscious altering our way of making decisions and preventing us from creating abundance.
And knowing these things, eliminating them from our lives and changing them for more positive beliefs regarding the creation of abundance, is key to being able to achieve success.
Myth # 1: Debt Is Bad And We Should Avoid It At All Costs
This is not just a myth but a total lie.
Although we know that banks are designed to make money at our expense, to generate their income based on interest, and insurers are hand in hand with them in unemployment insurance, life insurance and others …
You also have to know that I cannot reach great levels of wealth if I only use my own resources : my own time, my own knowledge and my own money.
A billionaire person knows that he needs to leverage the time of others, the money of others, and the knowledge of others.
And the money of others is usually borrowed with interest .
If I can compensate and exceed the interest that a debt charges me with the profits I obtain through a project in which I can invest and see something very successful, double the investment or whatever, interest is really irrelevant.
I have personally implemented this several times in my life.
I have had projects that have generated profitability of 30%, 40% in a matter of 3 or 4 months, where if we talk about an interest rate of 2% per month, that interest is totally irrelevant because it ends up paying alone and I never touch not a single penny from my wallet, nor from my account.
Myth # 2: If I Make More Money, My Problems Are Solved
Many people believe that the only thing they need to have better finances is to earn more money.
They do not lack organization, they do not lack a budget, they do not need to write down all their income and expenses, they do not need to save, they do not need to reduce some expenses, change the internet plan for one of less speed (if this does not imply the work and the ability to work and produce that income) …
In short, they do not need to make changes, for example in food products for others that are also very good quality but are cheaper, or be more aware of how they handle money, and many other things.
They think that only by earning more can they improve their financial skills.
And really financial skills is not making money: It is HANDLING money .
I can earn whatever money I want, but if I spend it all, it’s really like I won’t earn anything.
And so it happens to many people even who win the lottery, and at 5 years old they have absolutely nothing.
Therefore, making more money is an important part of creating abundance, of course! It is perhaps the initial step.
But the other is even more important .
And if you do not have stable, adequate finances at this time; more money instead of fixing that is going to make the problem worse .
Myth # 3: I’m Too Young Or Too Old To Succeed With Money
There are people who are 20 years old and say: ” no, I am only 20 years old and I am really just starting out, therefore I am not good with money “.
If I’m honest, 16-year-olds write to me telling me that they have seen my videos, that they have studied certain books, that they have a savings, that they are generating income, that they are actively seeking to work, that they buy and sell things, well …
While 20-year-olds are saying: “I don’t know what to do, I don’t know where to start, I’m in debt.”
Or 25-year-olds who already have amounts of credit card debt, unnecessary things they have bought .
Likewise, there are people who tell me: “But I am already 55 years old, I will not learn what I did not learn”, or the famous: ” Old parrot does not learn to speak “, or something similar .
And always, really always, it depends more on the motivation we have , the why and the motive that leads us to create a better life, a more abundant life if we acquire the skills or not, no one has to do with age.
Well, age perhaps affects in some ways, my ability to flexibly make certain decisions, even with more risks or something like that; But for the rest, the I know how to generate income, the I know how to manage people to create a company, to invest, to borrow, that goes separately …
If I am young, I have all the ability to work, I have all my time ahead of me, all my skills, the vitality of my body and so on.
And if I am old, I probably have some credit history, maybe I have savings, or I have some security and then I can undertake other things.
Regardless of all those things, anytime is the right time in case you haven’t started.
Myth # 4: Making More Money Is Simply Losing More On Taxes
Many people do not consciously think about what it means to earn more money in terms of taxes, especially if they earn less than necessary to declare income.
When we begin to declare income, to analyze that our assets are growing, that we have multiple sources of income, and that we are having a liquid income, or a fairly high profit in the year, and the state says « I want a little of that , give me this percentage here «, or whatever …
Well, there are people who start to worry and say: “No, don’t earn more money because if you earn more, the state will automatically want to take away your share.”
This changes depending on the country, in Colombia it is not as serious as many people think, there are really many options, tax benefits, and things we can take advantage of to pay less tax, even to invest in housing and other things.
But there are countries where it is really difficult and we are talking about places where you end up paying up to 50% of what you earn .
Go figure! That you generate a million dollars and barely have $ 500,000 thousand dollars left in your net fortune, the rest is from the state.
However, here I like to think about it:
If my goal is to generate a million dollars, then I have to earn two million dollars , and voila.
Although, growing more implies paying more tax, it does not mean that a person who earns more money than another, by paying tax, is left with less money than the one who earns less.
The tax projection is always marginal and it grows, whoever earns the most pays the most (normally it is), but if I grow enough to pay higher taxes, it really is because I am generating more money and it is because I am getting more to me to spare .
The fact of contributing to the state, whether it is worth it or the politicians steal it, or whatever (that’s another matter), it really shouldn’t stop me from continuing to grow, to continue to increase my income.
Nothing beats the fact that every year I increase my income by at least double, and keep growing, and growing, and growing almost exponentially.
If I live focused on that, taxes are nothing more than a small admission cost for financial freedom.
Myth # 5: It’s Not Worth Saving If I Can Barely Make A Little Money
There are people who tell me « but I earn X amount, and I can only save $ 50 dollars a month, $ 20 dollars a month, that’s very little, it’s not worth it. When I’m making more money, I’m going to save .
And this is where people do not know that saving is really a HABIT , and it is a habit.
It’s something that I develop through practice, that I improve through practice like any other skill, like the ability to learn to play soccer, or basketball, or even lifting weights where my muscles get stronger.
The saving muscle can be strengthened if I exercise it , otherwise it will never improve.
Therefore, I am always going to find things to spend my money on and then come up with the excuse that I have very little left and that I am not enough to save.
Myth # 6: I don’t earn enough to save money
Many people do make enough to save money, but they spend more than they should, they are victims of lifestyle inflation, and really if they don’t make enough, they should be making it.
So it is a myth on two sides .
On the one hand, because regardless of the value you receive, you can save 1% of what you earn and that’s it, and know that you receive 99%, not 100% of your income.
Or 5%, how difficult can it really be to forget that 5%, save it and acquire that habit, knowing that in the future it will improve your skills?
And on the other hand, if you don’t earn enough, then:
What is stopping you from earning more?
How much time are you spending every day in your free time, while you are not working or you are not dedicating time to whatever generates your income, looking for additional sources of money?
Why aren’t you getting up earlier to dedicate the first 2 hours of the day to study, to analyze, to work on something that will generate additional income?
Myth # 7: Cash Is Best Because Credit Cards Get In Debt
Credit cards only indebt those who DO NOT know how to handle them.
Sadly, there are many people who consider that the credit card is there only for emergencies, so when I have a sudden expense and I don’t have the money, I can get a cash advance from my card and with that I cover that expense.
Or for when I want to buy something in installments and pay incredible amounts of interest, knowing that there are better options and that one should never use a card for a purchase in installments, much less a revolving or free investment loan.
There are incredible, better options that can save you a lot of money, that allow you to pay in installments with much less interest if this were your goal, and assuming that the purchase is worth it and is really an investment.
Even if something is discounted, sometimes the interest damages the discount entirely.
Be that as it may, I can use a credit card paying in installments, without interest, the products that I am going to pay anyway with cash or with a debit card, as in the supermarket, market purchases, food, cleaning, or whatever else you need.
And instead of spending money on interest, I earn points, miles, credit history that will later save me money to buy a house with better interest rates, and many other things.
Knowing how to intelligently handle the bank’s products, I take advantage of the fact that there is a way to obtain advantages from them, but being financially intelligent.
Not necessarily being a NASA Engineer to understand how this works, but with some discipline and knowing that I should only buy with a card that for which I have the money to pay off that card the same month.
Myth # 8: I’m Still Young And I Don’t Need To Worry About My Retirement Stage
Perhaps this is one of the things that I myself regret having thought that way in my 20s, 22, 25 years.
Because if I had started younger to plan my retirement, to save even a little money, no matter how little, that money invested as such would have generated much more return and today I would have more than double what I have in my fund of pension.
When I think that I am very young and that the retirement or pension age is very far, but I listen to other people who tell me that they are already of pension age and they did not even realize when the years passed and they would have liked to do Better things, that’s where you realize that you better start as soon as possible .
Not only to plan but to really structure your financial life around what that retirement is going to be like.
Because by then we probably won’t have the energy to continue working …
And if we have it, it really is not fair, it is time to rest and enjoy, if it is not possible to start enjoying much earlier than it would be better, through financial freedom.
Myth # 9: To Invest You Need To Be Rich Or Have A Large Capital
If we talk about investment, there are a number of mechanisms or instruments, such as investment funds that you can open even with $ 20,000 Colombian pesos, or $ 7 dollars.
You don’t need any money to get started, very little, whatever amount you can is fine.
And you start to understand how it works, to try different risks, different deadlines, different ways, and you go on analyzing what works best for you.
Once you are more steeped in this knowledge, you get the right advice when doing it, and suddenly you decide to invest a little more, not only your knowledge and your ability to invest will grow, but probably your income and also your savings.
So this is more also a matter of getting started and practicing, and being good at it, not so much a matter of having a lot of money available.
But it is obviously going to help the fact that you increase your income or decrease your expenses and you have a good enough surplus for you to constantly contribute.
But if you think about it in the long term, the fact that you contribute an amount monthly for 10, 20, or 30 years will mean a large amount later, adjusted for inflation but considering a good profitability that can be acquired, especially in Many pension funds that have lots of options, I really could reach my goals much faster than I think.
Myth # 10: To Make More Money I Have To Work Harder And Longer
If you analyze 2 people, one who earns 10 times more money than the other, the most likely thing is that you will not see him working 10 times more, more time or with more effort.
The difference is probably two things:
- What are the knowledge that the one who earns the most money has, that the other does not have.
- That they pay you for your resultsand for the benefit of the value you provide, not for the hours worked.
A person who performs a normal working activity is paid for the hours worked and his income depends on this.
But a person who is a consultant or has their knowledge, or provides a service, or is the manager of a company, or whatever, depends more than anything on their knowledge , on their knowing how to produce that income to earn and not so much on That their work is the one that directly produces the money, but that they are leveraged through that person to generate much more.
So I can do something like smart work, not hard work.
And with that I really leverage myself to grow a lot more and put aside this myth that I should work harder.
Not even dedicating more time than I currently dedicate, but focusing well taking into account the Pareto Law of 80/20 , that of 20% of my efforts is where 80% of the results will be produced.
So, what is that 20% of activities that I should focus on to maximize my results and progress as soon as possible.
Knowing all these things will help you form a criterion, to forge a mentality that will lead you to abundance if you are aware of so many wrong things that are there in society.
And really acquiring knowledge and strategies to help you move forward is key if you really want to achieve financial freedom long before retirement or pension age.