Let Go Those Money Myths

We carry a lot of beliefs about money in our heads. Sometimes we are aware of these beliefs and even voice them. Sometimes we take these beliefs very subconsciously. Some of these beliefs are myths. Today I want to explore some of the most common ones.

1. Money doesn’t grow on trees.

Many of us have heard this time and time again. Our parents may have told us this, and maybe it is even the same thing we say to our children. At face value, this may be true to some extent. However, a farmer will disagree with this because for them money, actually does grow on trees. Granted you can’t pluck a leaf of money off a branch but the reason I called it a myth is because of the scarcity mentality it creates. It makes us think money is this scarce commodity that is hard to get. Once we believe that it is out of reach, we don’t do anything about it.

2. A deal will sort out my life at some point in time.

The belief that some unplanned event will at some unspecified point in time in the future give you this financial windfall that will enable you to sail into the sunset is a myth. Look around you. How many people do you know who have created sustainable wealth that way? That tells us something. So it is not a deal that will sort you out. People create wealth through a process, and there is no shortcut to that. You might as well get started as early as possible.

3. My pension fund will cater for my retirement.

Having a pension fund is fantastic. By all means, invest in it and keep it. But many of us think that’s all we need to do for retirement. Therein lies the myth. It’s a good thing to have and may be an essential part of your retirement plan, but it will not fund your entire retirement on its own. For argument’s sake let’s say your lifestyle today costs you Sh100, 000. Next year this same lifestyle (i.e., the same type of house, fuel, food, grocery shopping, etc.) will cost you more. That’s because of inflation. Prices of things will go up. So if you wanted to retire in 15 years, you would need over Sh400, 000 to sustain the same lifestyle. This will not come solely from your pension fund. You would need to have built up assets that generate this income.

4. I will save or invest when I earn more.

Are you earning more than you were three years ago? Are you saving or investing significantly more? Most people answer this question in the negative. This shows us something. We lie to ourselves when we peg saving and investing to earning more money or enough money. Simply Enough never comes. Sometimes we hold this magical number in our heads. We tell ourselves once I have Sh100, 0000 or Sh200, 000 or Sh1 million, then I will invest. In reality, the best investment for you is the one you can do today. Waiting to earn more is merely a way of procrastinating and keeping us in our usual comfortable routine.

5. I will ask for an advance just this once.

Do you remember telling yourself that the first time you asked for an advance? It never happens just the one time. It merely becomes a habit. Whether a salary advance, a credit card, personal loans, SACCO loans, it never happens once. We need to go figure out what happened in the first place to get us into this cycle. Expenses get out of hand. We start living beyond our means; meaning costs have exceeded income. We never rectify this equation, and before we know it, we are borrowing from everywhere to sustain ourselves. The advance, swipe of the card and so forth, will not magically stop without some effort on our part. Get your expenses in check.

6. I will get my money in order once I have the “latest”…

If there is one thing that is sucking the financial life out of us, it is trying to keep up. It is listening to the voice in our heads that cheats us that we will find some sort of fulfillment in having the latest gadget, car, clothes, etc. But this is what happens.

We become addicted to the temporary high the purchase creates. But like any high, it fades. And to get the same feeling we go back and buy something else. If your high was based on having the “latest,” there is always a new latest to pull you in. There’s a new phone, a new car, etc. It never ends. So don’t wait to achieve a certain material status to get your financial affairs in order.

7. I can do it on my own.

Wealth is never created in solitude. I believe that this is because wealth is never meant to be enjoyed in solitude. If you are trying to do it by yourself, you are limited to your knowledge and your own perception of things.

We must always seek to expand how we see things. This could happen through taking a course, going out of your way to speak to people, joining an investment group, working together with your spouse, and so forth. Remember, a solution to your challenge is always a person away.

Let’s drop the myths that are only keeping us from going to the next level.

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