Seven years after fully diving into personal finance and teaching myself how to build wealth, I find that a lot of money advice isn't new, complicated, or different. In fact, the largest source of money "advice" we receive on a regular basis isn't even advice at all. Most of the information we receive about money and wealth are all based on LIES. These lies are fed to us through entertainment, the media, and advertising. I should know, I worked in online marketing for a long time. We advertising and marketing professionals do our best to direct your attention and spending dollars to what we are selling.
It isn't that we truly believe that we can get wealthy by being a celebrity that we see on TV and in the media or on an advertisement, but we're force fed so many messages on where to spend our money. As women, we want the prestige and recognition, so we buy the labels and try to live lifestyles and learn to speak in the same vocabulary as Kim Kardashian without understanding the facts from the fictions. For instance, many celebrities fully own the fact that they do not buy designer clothing, they are GIVEN designer clothing. They wear their free clothing using their bodies as walking billboards. Which isn't a "lie" or "wrong," but if you, the viewer, aren't aware that this is happening, you can be passively persuaded to continue to spend money on an image that frankly, isn't real, and never was real.
Lie: If I buy the best, most expensive wardrobe, I will also be successful and admired.
Fact: The successful people are successful for other reasons than their wardrobes; they themselves are successful precisely because they do NOT buy the best, most expensive wardrobe, but they "do something successful" and in exchange are given those clothes for free.
What can we do about it: Define what "looks beautiful" on our bodies independent of the media and television. We can take care on what we choose to wear, how much we're willing to spend on clothes, how we treat our fine garments, and how we take care of our bodies that we adorn with each piece of clothing we own and wear. We can buy for value, not too much, wash and maintain and love what we do have in our closets, and keep our focus on improving the health bodies rather than expensive labels.
Now, it does depend on what you consider "success" to be, but financially, I do believe as long as Kim Kardashian is happy and has managed her money properly, she does not have to work ever again. And if she does work it is because she chooses to do so. And she is just one example. For a more high brow example, think Oprah Winfrey and her "favorite things," which she did not buy at full price in order to give away to hundreds of fans in her audiences on her TV show, most likely, she received a significant price cut on those items in exchange for promoting her "fandom" of each favorite item.
Lie: The more money we make, the happier we will be!
Fact: After about $70,000 per year, per household (!), general satisfaction of American adults sees slim to no change for every dollar earned annually above that amount. In fact, in certain cases of windfalls (making a huge amount of money from an inheritance, lottery, etc) can actually result in a decrease of happiness by about 50%. So 1 in 2 folks that receive all of the wealth they could ever dream of or imagine? That's right, they end up broker than they started with collapsed marriages and slew of other problems. I myself can say, as my income has increased, my happiness level...has largely remained the exact same. Going into trying to reach my financial goals seven years ago, I thought that I would actually "be happier" and "feel happier" once I became wealthier, but what I found was that, on this side of my financial problems, it's a complete lie.
What we can do instead: Define what really makes "us" happy. This means shutting off the Real Housewives on the TV once in awhile, it means having a little "emo" journal night alone instead of bar hopping for a hot man to "save us," and it may also mean asking ourselves the really sucky, scary, questions about life and seeing what naturally comes up for us (What happens if I don't meet "Mr. Right," like...ever? What if I'm single forever? What if, no matter what, my parents will never be satisfied with my choices?). Generally it also means that, if "money" is the answer to any of our problems, then we're not solving that problem correctly. There is always a better answer than "I can't afford that" or "I just don't make enough money to..."
Lie: I have to learn about the stock market, day trading, and investing to become rich.
Fact: There are very few successful day traders, the stock market itself is no more complex than a casino (remember, the house always wins...always), and most rich people become rich by working hard and persisting again and again after failure or are simply, born into money.
What we can do about it: You know what the first step to become an investor is? Save up a boat load of cash. If you do not know how to save up ANY cash then, don't ever worry about what "investing" or "stock market" mean. So...don't worry about investing ever again! THERE IS SOME FREEDOM IN THAT! Give up the idea of investing, just for now, don't put that dumb pressure on yourself! Let...it...go. Just start saving some cash and watch that cash grow. I have 1000's of tips how to do this, but it will be different for every single person. What I can say helped me the most? I committed to tracking everything I spent money on, and had money automatically taken from me into a hard to get at account. I was too lazy to move these funds and spend them. At the same time, I worked tirelessly on making more money, and instead of spending the more money? I increased the amount that was "taken" from me into this secret savings account. I just don't touch this money, and as far as I'm aware, it doesn't really exist because I've already "spent it" on my retirement, my future house, and whatever else I am saving for.
Lie: I can't save money because I like to buy lattes and designer jeans.
Fact: I buy designer coffees and designer jeans. But after buying two of each in one day, I realized that I would probably never fall off the deep end and end up in irreversible debt and then have to sign myself up for a Spenders-Anonymous program. Lattes and jeans aren't the reason why you can't save money. You can't save money because either...you don't want to, or your don't know how.
What we can do about it: Learn how to save from...people who are good savers. Develop some of their habits that end up working for you. Frankly, earning more is also an excellent way to "save more," but won't really make a difference if you have a spending problem in the first place. If you want to learn how to save, start hanging out with your frugal Aunt so-and-so, and pick up some her habits.
Lie: Save for retirement? I don't even have enough room in my budget NOW to save!
Fact: Um, if you're in your teens, 20s, 30s, or 40s, those are your most productive years to EARN MONEY. If you can't afford to save for retirement, then you will never be able to afford to retire.
What we can do about it: How do I even know this is a lie? Because I told myself the same thing when I was making pretty decent money at age 22. Now I realize that it was that I couldn't AFFORD to save for retirement. It was that my LIFESTYLE was more important for me to spend on than saving for my retirement. That being said, start with $1.00 per month. Can you save $1.00 per month? Can you open a RothIRA today? Can you set up an automatic payment for $1.00 per month? Then fact: you CAN save for retirement. One...dollar...at a time. Remember this, the number one thing people over the age of 40 advise younger people on is to save for retirement, aggressively, and early, the earlier the better, and there is no such thing as "too early."
Lie: I'm just going to save up some money, quit my job, and travel. It will change my life!
Fact: Committing to saving for any goal, executing it, and introducing a change as significant as quitting a job without another job lined up is risky, and it will change your life, but not for the reasons you think. True, other cultures will open your mind, expose you to new realities and beautiful ways to look at humanity, but the reasons why it changes peoples' lives is it focuses an individually on a savings goal and how to creatively make changes to reach that goal. Future "travel" expenses become more important that current "desired" expenses. This shift itself is enough to change your life, and it's a heck of a lot cheaper to save for travel than it is to actually travel.
What we can do about it: Travel, save up and do it. You won't regret it. However, remember that you bring yourself with you along with your baggage - physical and emotional. If you think people are out to "get you" in the US, you'll think the same abroad until proven otherwise. If you meet a guy and pine over his lack of "calling you back," you generally take that with you too unless you get carried away with the "this only happens in Cabo mindset," which is the "you" you want to actually get to know when you travel a la the "what would you do if..." mentality. Because what you really want is probably to "feel free from daily expectations of what to do, who gets to tell you how to do it, and worry whether you're doing it right." So, figure out ways to introduce these feelings into your life TODAY. Free style dance is an excellent way to be free of expectations, no one can tell you how to do it, and when done in private, no one except yourself can tell you that you're doing it right or wrong, frankly it's free style so...even in public no one can tell you what's right from wrong or good from bad, but they make gawk, point, and stare--hopefully they join in though ;). Or how about taking the "long way home," take a different way home on your commute, disregard the typical "rush hour" for a "relax hour and a half." Take your time, try to get lost finding a short cut. How about taking a hike nearby at lunch. Or what about going to concert you'd never consider usually.
What does this mean? There is no magic pill to getting rich. Just like there is no magic pill to losing weight. But in weight, money, and in all areas of life, what holds us back isn't "food" or "money" itself, just the REAL HABITS to get to where we'd like to be.
Because, as James Altucher would like to recommend that I say about investment advice, frankly I DON'T KNOW. I don't know how to make you rich. I don't know what will help you save more money. But what do I actually know? I know a few good tried and true habits on how I did it and how others did it too. We're NO DIFFERENT than you. I promise, we're no different than you. Our incomes now were just mere "wouldn't it be cool if...we made over $100k a year," outlandish and FUN dreams just a few years back...until those dreams became reality. And most of that reality doesn't include glamour, the stock market, or other fancy ideas from the media and entertainment industry.
Parting notes on the stock market: I think women especially, and maybe plenty of men too, glamorize the stock market and Wall Street and corresponding media outlets on the financial industry. Movies like American Psycho and the Wolf on Wall Street do nothing but confirm this glamorization of investing and the stock market. But it isn't really that glamourous...I should know, I'm an expert because I've dated an investment banker before and spent time with his friends in the investing community. Ok, maybe this doesn't quite qualify me as an expert, but in my defense, all of the investment bankers that I got to know throughout my dating experience turned out to be incredibly over-worked, rarely saw their friends and family, and often had crazy rituals (or in some cases: addictions) just to make it through each grueling 17+ hour work day, commute, and getting pooped on by upper management for year after year of their career along with other investment bankers, all vying for the exact same management position only one of the group of them would ever actually "win" and be promoted into.
So why do we glamorize the stock market and investing? Why don't we glamorize the retired couple, he a teacher, she a hair dresser, who saved their whole lives, at careers they actually loved and enjoyed, raised their kids, paid off their house, live in the midwest and now get to play bridge, volunteer for city government, and golf everyday when they're not spending time with their grandkids? I largely suspect it is simply because....those retirees aren't trying to sell us anything!
Now dear readers, what lies about money have you come across? Please share in the comments below!