Having money is not the same thing as being wealthy. That is number one on my list of money myths that too many people believe.
Does that first sentence shock you? Maybe you’ve spent the last ten years making money, believing that you’re on your way to becoming wealthy. You might be. But you also might be simply stockpiling money for a rainy day – not headed toward true financial success.
Wealth is only built through wisdom, stewardship, and leverage. In other words, long-lasting monetary success comes from careful planning and becoming a master of your money.
Here are 4 money myths that you might be believing:
Myth #1 – People who have money know how to invest it.
Just having money does not mean that you know how to handle it well. Operating with wisdom is so crucial to long-term financial sense. If you’re not using wisdom now, you need to develop it!
Proverbs 24:3-4 (The Living Bible translation) says, “Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts.”
Start by building knowledge – taking courses, reading books, listening to podcasts, attending conferences – and then gain understanding. Continue to walk in understanding, and eventually you’ll gain wisdom.
Another crucial piece to this puzzle is learning from your mistakes. Profit is made by solving problems that others could not solve. Profit is also made by solving your own problems. Pretty exciting when you think about it, right?
Myth #2 – People who have built successful businesses know how to invest.
I once met a man on a cruise who owned 11 McDonald’s Restaurants. They were all completely paid off! He had $13 million in the bank and a 12,000 square-foot home that was paid off. This sounds like true wealth, right?
Well, here we were sitting on this cruise talking about how this man would increase his investments. His dad was a surgeon who left his mother broke. Despite coming from money, he did not come from wealth. He had never learned how to make money through investing – which means he was missing out on a whole lot of potential.
The moral of the story is this: just because you know how to make it in a specific investment doesn’t mean you know how to make it in other types of investments. This takes us back to myth #1 and the need to develop wisdom.
Myth #3 – People in the financial services industry know how to invest your money.
Think back on some of the financial scandals you’ve heard or read about. The largest bankruptcy in U.S. history happened to a global financial services firm – The Lehman Brothers. In 2008 with over 26,000 employees, Lehman Brothers declared bankruptcy with $639 billion in assets. That is an amazing mind-blowing amount! But it tells you something – the financial services industry is not always empowered with investment knowledge.
Another story you’ve probably heard is that Merrill Lynch lost $250 million in the first six months. The company was not vetting their investments as well as they should have. So, the brothers took their $750 million (the leftover) and invested it themselves.
These stories, again, take us back to myth #1. Walk in wisdom. Gain knowledge. Develop a deep understanding. No, you do not need to personally invest all of your money, but you do need to have a depth of wisdom about where to invest your hard-earned dollars.
Myth #4 – The richest Americans are primarily invested in stocks and mutual funds.
Think about this one. Bill Gates built his wealth through a business called Microsoft. Warren Buffet purchased entire companies. Investing in stocks is not the only way to go!
Some people do invest primarily in stocks. And some people who have built successful businesses do know how to invest their money. But to assume that investing in stocks and mutual funds is their means of wealth building – or even their source of wealth – is unlikely.
I personally like investing in real estate and have a ton of information on this blog about building a successful real estate business. Find out more about that here.
Remember this key truth: your job title and your bank account do not represent whether or not you are wealthy. Only knowledge, understanding, and wisdom can truly make you wealthy.
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