Money is a tricky topic. It's sometimes awkward to talk about. And, most of us were taught that we're not suppose to. We were told that it's impolite to discuss how much something costs or how much money we earn. Yet, it's always on our minds. As entrepreneurs, we want to do what we're passionate about and build an amazing, purposeful life while at the same time finding financial freedom and creating wealth for ourselves.
Creating wealth starts with understanding your own relationship with money. An unhealthy relationship with money means you may never achieve financial freedom. If it's uncomfortable for you to talk your finances or you have an unhealthy relationship with money, you've got to change the way you think, feel and act about money. Your old money stories hold you captive and prevent you from achieving wealth. But if you can shift the way you think about money, you have the opportunity to create the abundance you desire.
Are you ready to have your mind blown? Let's start with what you've been taught that's not working for you. According to Robert Allen, author of Creating Wealth, most of us have been taught things about wealth that are no longer - or were never - true. Here are Allen's nine most prevalent faulty assumptions about wealth. As you read them, notice how there is a grain of truth to each.
False Assumption 1: Having a job leads to wealth.
Wait, what? Many of us were taught that finding a good job, working hard, and moving up the corporate ladder would give us a good retirement. In actuality, a job only supports our daily habits and rarely leads to wealth. What we should be doing instead is looking at a job as a temporary inconvenience. Sure, we need it for awhile to gain experience and to figure out what we're super passionate about, but if you're trying to get rich, the goal is to acquire ownership of a generous source of income that flows regardless of your job.
False Assumption 2: Saving money is a good investment
"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." Allen says. Saving money is not bad. It's an important part of building wealth, and you definitely need savings in case of emergencies. But stockpiling money and never doing anything with it, even assuming only minimal inflation and taxes, just means your savings loses value every day. If you want to build wealth, you need to save smart. Put your savings in liquid, interest-bearing accounts first. Then, shift them into long-term, less-liquid investments that generate returns greater than 20 percent.
False Assumption 3: Debt is bad.
Not all debt is bad, just consumer debt. Borrowing money for the appearances of wealth doesn't do anything for your wealth. But investment debt is good. You cannot build wealth without going into short-term investment debt.
False Assumption 4: Security is good.
Nope, security is just an illusion. Consider this: marriage is "secure," and yet that doesn't stop people from cheating. The more we crave security in finance and business, the more we will avoid risk. Risk is a necessary and important part of the wealth-building process. Calculated risk, that is.
False Assumption 5: Failure is bad.
Do I really even need to tell you this? The first time you fell down on the playground as a kid, did you get up? Yes. Obviously you're not still lying there. Was your ego scarred forever? No, probably just temporarily. The point is, taking risks sometimes mean you're going to fail. Get used to it. Failure is crucial to success. Most successful people have failed. Try to see the silver lining - that maybe you learned an important lesson from failure.
False Assumption 6: Wealth is measured in material possessions.
"Broke is a temporary condition. Poor is a state of mind," says author Hollis Norton. The opposite is true for wealth. Wealth is a state of mine. Wealth is NOT money. Money is merely the appearance of wealth.
False Assumption 7: The government, my employer or someone else is responsible for my financial well-being
We are responsible for our own financial success. That's not to say we shouldn't have unemployment benefits, government programs, etc. But the point is, you're the one who's going to determine your financial success.
False Assumption 8: Acquiring wealth is a win-lose game.
Sometimes talking about money feels a little dirty. Why? Because being wealthy has always been seen as a greedy game where one person conquers another to meet their own needs (i.e. Scrooge). "In reality, there is an infinite source of wealth," Allen says. When you become wealthy, you increase the chances of the people around you also becoming wealthy. The tide rises all boats.
False Assumption 9: It takes money to make money.
Not completely false. You do need money to make money, but it doesn't necessarily need to be your own money. You can become wealthy starting from where you are today.
So there you have them: the nine false assumptions you have about building wealth. To learn more about how to get rid of them, pick up a copy of Allen's book Creating Wealth. He shows you exactly how to rid your life of them.