Most money myths are not true.
Most of the mainstream narrative around money myths has been disproved by modern, developed society, time and time again.
Read this article until the end and you’ll be smarter than all your friends who regurgitate the same old outdated ideas.
Here are 15 Money Myths Debunked!
Don’t worry if you don’t feel like reading, you can enjoy the video below or watch it on YouTube:
1
Money myth #1 – Rich people are crooks and evil
Overwhelmingly False.
This is one of those remnants of the past, the past of slavery, where only the rich could afford to own slaves or you got rich using slave labor.
In today’s world, doctors, lawyers, and software engineers are all well off. Not Forbes500 rich, but well off.
The most common profession that builds wealth is an entrepreneur.
You have an idea, you create paying jobs for people and build a business out of it. If your idea solves a problem that people are willing to pay for, you get rich.
People wrongly assume that in order to get rich, you trick other people into giving you money, an absolutely absurd idea. The marketplace decides whose idea and execution are valuable.
You can either trade your money in exchange for someone’s effort, expertise, and network who’s gonna build you the house you want… or you are free to do it yourself. Once you change your perception about how easily wealth is generated by providing value for others your entire worldview changes.
Plus:
You can not become something you hate!
If you hate the rich, you’ll never be able to build wealth because you’ll always be blinded by the hatred and never look and learn what’s actually happening.
2
Money myth #2 – You get rich by saving your money
False.
This is another one of those things that poor people borrowed from rich people but without the proper context. The truth is:
You don’t get rich by saving money. Saving money allows you to stay rich once you have already gotten there!
We’ll say this again, but differently, so it really gets in your head:
Saving money allows you to maintain your current level of wealth!
It does not move you up! This idea might be a massive wake-up call to most of you.
The mainstream believes in this idea of wealth as an outcome of accumulation, and they couldn’t be further from the truth. You get rich by earning money while you’re not working. This doesn’t happen through savings, only through investments.
An investment is something that generates non-stop income for you, without the need for your input, be it time, money, or energy.
The money that you save in your piggy bank, bank account, etc. is not an investment. Cash is actually a depreciating asset.
Meaning it’s losing its value while you keep it under the mattress. 100,000 dollars 3 years ago is not the same as 100,000 dollars today when everything is at least 50% more expensive. This money myth is a money trap in disguise.
3
Money myth #3 – The more money you have, the happier you’ll be
Partially true.
There’s a threshold of happiness. Today, it’s around 100,000 dollars per year in earnings.
So poor people are correct when they say that money will make them happier because most of the reasons for unhappiness in their lives revolve around money problems.
- Money can fix money problems.
- Money can increase comfort.
- Money can take away the stress of everything money-related.
The truth is, money doesn’t actually make you happy, but it can remove some of the unhappiness you have in your life. Once money can no longer solve your issues, you’re faced with a different set of problems.
There’s actually a money trap most people are not aware of. There’s a point where making more money actually causes you more unhappiness.
Yeah, you heard that right.
The basis for it is the law of diminishing returns. Let’s say you have a box of infinite chocolates in front of you.
The first chocolate tasted great. The second one is also great, but just a little bit less than the one before. 50 pieces of chocolate later, you’re already full and tired of eating chocolate.
So what happens if you keep going? 10 more, and you start feeling sick? Another 10 days and your body starts to reject it. Another 10 and you might need to go to the hospital.
Keep eating, and you will eventually die.
Believe it or not, it’s the same with this money myth.
Actively earning money and climbing the financial ladder is incredibly stressful. You’re constantly putting out fires, solving problems, and dealing with issues that are keeping you up at night.
The more you climb, the magnitude of these problems increases.
At this point, you’re probably wondering: so Alux what is the sweet spot? Where do you stop trying to earn more money?
Honestly, that answer differs from one person to the next, from race, geography, upbringing, and so forth. From a ballpark perspective, 15-25 million dollars should be more than enough for you and your family to never have to worry about money again.
From 25 and up, money no longer contributes to your happiness index. Remember this as you climb.
4
Money myth #4 – If you want to get rich you need a big salary
The biggest lie modern society has told us is that: In order to be rich, you need a high-paying job!
Absolute bollocks. This is because people confuse professional status with wealth.
A high-level lawyer or doctor is well respected in society.
They have garnered esteem from their fellow citizens because normal people need their specialized services in dire times. So this artificially inflates their perceived worth, the same way a bottle of water is more valuable in the desert than in a supermarket.
What you don’t see is that, behind the scenes, the cost of living that identity is also going up.
The lawyer lives in the city center in an overpriced apartment. He drives an overpriced car and pays too much for his suits and ties. Think of memberships to country clubs, charity dinners, etc.
The cost of being a successful lawyer goes up proportionally with his income.
The same goes with most professions, where the saying goes like this: dress for the job you want. But if you want to be rich, it’s not your salary that you should monitor. Most ultra-wealthy individuals have no salaries at all. Instead, they have ownership of the business.
Instead of working for a top law firm, own a top law firm. The richest doctors in the world do not practice medicine; instead, they started pharmaceutical companies or own their own clinics.
If you want to get rich, own something that increases in value over time!
5
Money myth #5 – With High Risk always comes a High Reward
And the myth that: Entrepreneurs are Risk Takers. Not really… no.
High risk probabilistically returns a negative outcome. This is why 9 out of 10 businesses fail. The job of an entrepreneur isn’t to be risky all the time, it’s actually the opposite.
As an entrepreneur, your job is to minimize risk as much as possible.
Proof of ability mitigates risk.
Going for a swim is riskier or less risky depending on how well you swim. There’s always a risk involved when you’re in a pool, but the risk is not distributed equally amongst the populous.
In life, we always fall back to the level of our preparation!
Risk is an attribute of the unknown, which more often than not arises as a lack of preparation.
You get rich by taking big risks with little money!
You stay rich by taking small risks with large amounts of money!
High risk implies risking everything every single time. The problem with this strategy is that you need to get lucky 100% of the time. Here’s where this money myth gets it wrong.
You might get lucky the first 3-4 times, but if you’re constantly betting on everything every single time, it only takes 1 event to wipe everything away.
It’s the same with cheating on your partner, thinking you won’t get caught.
You do it once and get away with it, thinking you’re some mastermind genius, so you do it again and again until you slip once. Now you’re in a messy divorce while seeing your kids on the weekend.
High risk is almost never worth it.
6
Money myth #6 – You need to be rich to invest
Partially false.
You can invest at all levels of income.
A share of Disney is $100. A share of Coca-Cola is $60. Wells Fargo: $38.
When people think of investments, they think of factories, apartment buildings, and digging for emeralds in the Congo. But in reality, investing is a habit that makes you richer.
A portion of your income should go towards investments. These investments will grow over time and alleviate the potential pain in your life. Your only job is to increase your income and, as a result, the amount you’re able to invest.
The reality is that it’s hard to invest a portion of your income when you have emergencies that require immediate attention. It’s hard to invest when the car is making expensive noises and you’re behind on your rent.
The root cause there is one of income vs. expenses. If this is you, you’re either not earning enough or you can’t afford to live where you are right now. Sometimes both.
7
Money myth #7 – It takes money to make money
False.
Sure, it’s easier to make money when you have some money, but it’s not a mandatory requirement.
Any healthy person can, at any point, choose to trade their time for money!
How much money you’re going to get for your time depends on the level of your expertise and the existing demand for what you offer.
The better you are at what you do, the more you can charge for your services. (Quality)
The fewer people offering the same service as you, the more clients you’ll have. (Differentiation and Competition)
The more time you’re willing to trade, the more money you’ll have. Let’s take two barbers with the same level of expertise and the same prices.
One works 4 hours per day and is able to serve 3 clients.
One person works 12 hours per day and is able to serve 9 clients.
In only 3 years, the second barber has earned as much money as the first barber will earn in a total of 9 years.
These are two people with the same specialization and the same clientele. One is outearning the other by a massive margin when you zoom out. And it didn’t cost any more money to create this gap.
Any fool can make money if they have enough of it. The real value lies in being able to make money when you have none.
8
Getting money with your tax returns is a good thing
False. This is a money myth is a money trap in disguise. You can read more about money traps here.
Tax season and preparation will be upon us fairly soon, and it’s always shocking to us when people are happy that they’re getting money back from their tax returns.
Not only does this show how bad at math some of you are, but it’s money that you could’ve been using yourself that you lent to the government at zero interest.
You are under no obligation to pay more taxes than you are legally required to!
And taxes are part of the wealth growth process, something that’s actually pretty basic to learn. Take a moment to think about who the people are who complain about not understanding how taxes work and what their net worth is.
On the other hand, every rich person out there will tell you exactly what’s happening with them from a financial perspective, quarter by quarter.
9
More money -> More problems
This money myth is false.
Money on its own brings no additional problems than you had before. It actually solves most of your previous problems, if we’re being honest.
A truer statement would be more money -> new problems!
Because although the volume of problems you will be dealing with roughly remains the same – or is slightly lower – the nature of the problems changes. And at the very extremes, the magnitude of the problems differs.
Being broke is hard and comes with its own set of problems.
Trust us, being rich is hard, and it comes with a different set of problems.
But one must choose their hard.
Because we grew up broke, we actually embrace the new kinds of problems we have now.
We’d much rather figure out which banks to move forward with than have the existential dread we had in the beginning.
We’d much rather figure out ways to inspire our employees than not know where the next payment will come from.
Embrace the problems you have right now in your life.
10
Retirement is the gift of working hard for your entire life
False.
What’s the point of retirement when you can no longer taste food, run up a hill, or be spontaneous with your life?
In most cases, the company you work for has monetized your body for over 40 years now – your best years – and here you are at age 65, with white hair, and overweight. You get tired sitting up and can barely see both far and near.
That’s the reward? That’s the: go ahead and enjoy life? Are these the GOLDEN YEARS? Really?!
So here’s what we’re going to do for you right now. We will debunk this money myth and forever change the way you think about retirement! Are you ready?!
Retirement is not an age; it’s a number!
Repeat that: Retirement is not an age; it’s a number!
Once you hit your number, you can retire. You can hit your number at 30, at 40, at 50, at 60, at 70… The number doesn’t care about your age. It’s just a number. How many people in the world do you think even know about its existence?
Out of those very few… How many of them do you think have taken the time to even figure out what their number is?
And no, it’s not 10, 50, 100, or a billion dollars.
The number is two times what your lifestyle costs, generated by your investments.
How quickly you get there is up to you.
If your lifestyle costs $60,000 per year (this includes food, gas, clothes, subscriptions, etc. – add it all up)- that’s $5000 per month on average. That means your number is $10,000 per month from passive income.
If your lifestyle costs $120,000 per year… Your number is $20,000 per month.
If your lifestyle costs $250,000 per year… You might want to look into why it’s costing you so much, but still. Your number is $40,000 per month from passive income sources.
We’re not saying it’s easy to get to your number. But it’s not really as hard as you think it is if you put all your focus, energy, and drive into it.
There are multiple paths one can take to get there, and anyone who takes the time can actually learn how to get there.
A couple of months ago, we released a Principles of Wealth Building pack in the Alux app that walks you specifically through this.
Go to alux.com/app right now and you can purchase the pack for $24.99 for lifetime access.
But since you’re an Aluxer, there’s a way to get even more value for less: if you get yourself a $14.99 monthly subscription, you have access to all Alux packs while your subscription remains active.
It should take you a few days to go through the wealth pack, and then you will have enough time to sample the rest.
44% of the people using the app report that they have already achieved their primary goal, and another 41% say they are closer than before.
The app works, people!
It does what it’s meant to do, which is: to cut down the distance between where you are and where you need to be.
It works for so many people, why don’t you try it and see if it works for you? Go to our website right now and download it!
11
Money doesn’t grow on trees
Factually true. However, this money myth is metaphorically false.
Money doesn’t grow on trees unless you plant the right seeds!
Also, now that we think about it, money actually grows on trees if you sell the fruit of the tree—ask anybody who’s really invested in agriculture.
Just because money doesn’t grow on YOUR trees, there’s no need to lump everyone together.
Trees require a good seed, great soil, attention, sun, water, nutrients, protection from rodents and predators, and the occasional trimming of some branches.
And even if you do everything right, it will still take several years before it bears fruit. Growing a tree is actually quite hard. Do you see where we’re going with this?
You might want to re-evaluate your reality, plant some seeds, and see what happens.
12
The best things in life are free
Partially true.
When people say this cheesy quote, they think of how love is free, how being healthy when you’re young is free.
But add the magic ingredient called time to any of their examples, and you’ll see the outcome of the experiment shift.
A loving family might be free, but what if one of them required medical attention that could keep them around for years and you couldn’t afford it?
It’s hard to be lovable when you no longer love yourself because you see yourself as a failure unable to provide for your family.
If you can get the best things in life for free, good for you. Enjoy it before life starts putting a price on it.
13
Cash is King
This money myth is no longer true.
Cash used to be king, and it was king for a long time. But then, it got abusive. And people began walking away…
Take a moment to think about it… What’s a king without the power invested in the crown by the people? Cash no longer holds value. They’re printing money like crazy, robbing you of the worth it had.
Every time you hear them print more money, know they’re taking more of your value and giving it to themselves.
14
Time is money
Commonly quoted money myth. However, it’s mostly false.
Time is time.
Money is money.
Just because sometimes you can choose to trade one for the other doesn’t mean they are the same or interchangeable. If we offered you $1,000,000 but you couldn’t wake up tomorrow, would you take it?
Of course not.
So waking up tomorrow morning is worth over 1 million dollars to you, yet people don’t act like that, do they?!
15
You can’t take it with you when you die
It might not matter to you, but it does matter to the people you love.
We spend our lives in the pursuit of minimizing misery in all its forms. If you were fortunate enough to do well in life, you might not be able to take it with you.
But you can leave it to your grandkids so that your memory lives on.
How amazing would it be for your great-grandkids to play around in a forest that you planted? To run across a field, a piece of land that you purchased and left for all future generations to enjoy?
If there is an afterlife, wouldn’t it make you happy knowing you are a source of happiness, health, and wealth for those who come after you?
Wealth: be it material or intellectual, is our species’ way of immortality, or at least an attempt at it.
See the pyramids; see all the breakthroughs in science or art. Puts life into perspective, doesn’t it?
