Money is a important part of our life. Money may not buy happiness but it can buy freedom which can bring happiness. So, indirectly money can buy happiness.
It is true that without money we cannot survive. But there are some misconceptions about money that can keep us poor until eternity.
In this post, I will talk about 10 biggest money myths that most people still believe. I am sure you will agree with most of the points given below.
#1. working hard equals more money.
You may have listen this dialogue many time. Many people still believe that working hard equals to more money. But this is among biggest money myths.
Al-thought, this does not means that money will automatically pour into your lab. Money comes when you provide values to other people and do what you love.
Money comes when you do great work and remember once Steve Jobs said “Only way to do great work is to love what you do”.
Lets take some real life example here.
Once there was a village. That village had a problem of water, so some unemployed people saw this as an opportunity and decided to supply water to the village.
They will charge 10 cents for every gallon of water they bring from outside. All those unemployed people start making money as they worked hard.
Those people walks 14 km t o 20 km daily to bring water from outside.
In this situation, one person started thinking that even after so much hard work, we are able to make just small amount of money. He started to find solution for it.
After researching and finding so much, he got an idea. The idea was to build a pipe line throughout the village. He started working on this idea and build a pipeline throughout the village.
Now, as he build a system, he started charging 2 cents for every gallon. All villagers started taking water from him and all those hardworking workers who walks 20 km daily become unemployed.
The person who build a pipeline become the richest person in not only the village but in whole town. Now, he also do not need to work hard like earlier because he owns the pipeline now.
This story destroys the myth that working hard equals to more money. The truth is you get rich by solving problems of others.
#2. Saving money makes you rich
Most people believe that saving money can make them rich. Al-thought, this is better than spending chunk of money in Las Vegas casinos but it is not enough.
Value of money never remains same. Any market crash can cause deflation of money. It means that purchasing power of currency went down.
This doesn’t mean that you should burn your money in useless thing but saving money is not financially intelligence. The only way to overcome this problem is to invest your money.
Then question arises that where to where to invest money. Most people wants quick fix, so they start investing in mutual funds. But any financially intelligent person will never invest in any type of mutual fund.
Well, you do not invest your money in stock market or buying a franchise. You can simply use 33% principle. This says that whatever amount you earn, invest 33% in safe investment, another 33% in risky investments and remaining 33% you can spend for yourself.
This principle can be hard to follow but it is very powerful.
#3. There are only bad debts
You may be thinking that debts are bad and you never want any debt. Al-thought, it is true but debts are bad only when we take debts to buy personal things like car, house etc.
Good debts are when we take it to buy investment. Lets understand it by taking a real life example.
Suppose you have $100000, then there are three cases
- You save that $100000 into your bank account.
- Or buy property worth $100000 and rent it to get $1000 cash-flow every month.
- You take debt of $1 million dollar and buy property worth $1 million dollar. Give it away to rent and avail cash-flow of $10000 per month and pay your mortgages using that $100000 and cash-flow of rental properties. Once mortgages are paid you would be able to get full $10000 cash-flow.
In third case you are leveraging the power of good debt. It is simply a debt which is use to acquire assets. This is the secret behind wealth of richest people.
#4. Only way to earn money is to work for it.
It is one of the biggest money myths that keep most of people slave of money. As Robert Kiyosaki, author of one of the greatest business book of all time Rich Dad Poor Dad.
He has mention that poor work for money and rich make their money work for them. This is called as passive income. It is a income which keeps on coming even if you stop working.
In normal job, you get paychecks months by months but if you stop working. Paychecks also stop. But in passive income, it keeps on coming years after you stop working.
Al-thought, creating passive income is difficult but once you build passive cash-flow. You can enjoy the rewards for years and some time for life time.
#5. Money cannot buy happiness
You may have listen this dialogue many times. People who are them-self not able to get financial freedom say this to make themselves feel good. But it does not change reality.
I am not saying that you cannot become happy without money. But money can bring happiness more easily. Money directly do not provide happiness but it help you get freedom.
Freedom to travel anywhere, live anywhere and complete your desires.
So, these were some money myths. You need to think beyond these myths if you want real time and money freedom. If you want to share some more myths, then you can tell us in comment box below.