Misconceptions about Money

Misconceptions about Money

The fear of money is real. It’s funny how we all love money (not in a bad way you know) but are scared to talk about it. It is not anyone’s fault, most people grew up with the wrong beliefs on money. Some wrong beliefs include:

  • Money is the root of all evil
  • Money is meant to be spent.
  • Money is not important
  • Money is gotten either by luck or through dubious means.
  • For a person to be rich another person has to be poor.
  • Money is a scarce resource.

All these are limiting beliefs that prevent one from seeing what money really is.

a dollar note
Photo by Timis Alexandra / Unsplash
In finance or economics class, money is said to be anything that is generally accepted as a means of payment for goods and services and payment of debt.

Lets go down memory lane, in the olden days people exchanged using trade by barter. Do this for me i do that for you, a cow for 50 chickens. Next was the use of commodities like silk, wool then iron, silver, gold then coins and it continued till paper was made(cash).Cash is what we use it date.

Paper money was first used in China some 500 years before it was used in Europe. In the 17th century European counties started producing paper money due to shortage of coins.

coins
Photo by pina messina / Unsplash

Generally paper money (dollars) always had a relationship with gold. However in 1971 President Nixon severed the direct convertibility of U.S. dollars into gold, world currencies stopped being backed by gold because much of the world currencies relied on dollar and with that, fiat money became the money we know today.

Fiat money is money that isn’t backed by any physical commodity. It is just an arbitrary act or decree that makes it acceptable as money. Paper is what we spend as money so why be scared of paper. It is meant to be a tool that help us store value.

Below are refute to the above listed misconceptions.

  1. Money is the root of all evil: A tool is neither good or bad. It is what you use the tool to do that matters. Money has never being the devil because it is a tool. How you use it is your responsibility. A person who is good will use money to perpetrate more good, so does an evil person.

People often say money is the root of evil to pacify themselves and feel a kind of “holier than thou”. Funny enough what they tag as evil more often than not is not different from what they would do when they are in that position.

2. Money is meant to be spent: Technically yes, but no not all the money you earn is meant to be spent. Sometimes you spend, sometimes you save and invest. How would you fare without having to work again due to your illness or old age.

The money you earn should be used as seeds to build your wealth-create cash generating assets like equity, real estate etc.

3. Money is not important: Whoo, I’m sure you are looking like “is this even true?” Well there are people that don’t see money as something important. I agree that it should not be that important in real sense, but how do you eat a decent meal? keep a roof over your head take care of your health and travel?

You need money. There is no way you dodge money. Money problems like these questions are solved with money. Therefore money is not unimportant, it is as important as a hammer for a driving a nail, that is it is only important in serving as a tool to solve problems.

4. Money is gotten either by luck or through dubious means: C’mon!!! If Bill Gates never wrote those codes you think he would own Microsoft? Would he be that rich? Get up and show up. There is enough for us all. Do the hard work and see your star shine.

Luck is something random but money hardly comes through luck, if it does it also goes by luck. This is the case of lucky gamblers who earn millions and within few years they are back to where the started or worse off.

Every rich person works hard for his or her money. Those that have money through inheritance, they still have to keep working to preserve the money or else it would finish.

There is an exception for those that are corrupt and cut corners, they don’t deserve it.

5. For a person to be rich another person has to be poor: Listening to Naval Ravikant on his podcast talk about the Zero- sum game was a game changer. Status is a zero sum game. A zero sum game is a game where all the inputs equate to zero. Forces cancel out the effect of each other.

Money or wealth is not a zero sum game because for you to be rich, someone doesn’t have to be poor.

There is enough money for us all

6. Money is a scarce resource: This is a fat lie. There is money enough for us all. This statement has been repeated because of its importance. Understanding that there is always abundant of money when you do the right work. This is evident in today's world as the average Joe in most countries has more money than his counterpart some seventy to eighty years ago. The S&P 500 Index has never been this high in history more than 3000 points and Dow Jones Industrial Average is little above 39 thousand points.

The world is becoming richer and you too can.