On the road to building wealth, there are many roadblocks that can set a person back. By getting “hung-up” on these roadblocks many future people who could have been wealthy are stuck living the middle class lifestyle. These roadblocks come along as assumptions common people make.
But as everyone knows not all assumptions are good knowledge, and in finance there are 7 faulty assumptions that can cause a person to lose wealth and opportunities.
Assumption #1: I need money to make money
This faulty assumption leads many people a-stray. It is less of an assumption than rather a circulatory negative attitude that perpetuates amongst those without wealth. The fact is one rather needs a positive attitude than money to achieve their goals of making money.
Once one starts with a positive attitude it makes no difference whether a person is starting with a mountain of debt or mountain of wealth. They are already on the right path to making money and there is no doubt that they will. For example: if one has nothing in their bank account but debt and takes on a job that pays quite well, they are already on the path to making money. There was no need for them to have money to start making it.
Assumption #2: The government is responsible for my financial well-being
One can blame everyone else when it comes to anything in life, but with regards to wealth your own personal finances are just that – your own. One may feel like the government is unfair when it comes to taxes, or may feel dependent on the government for unemployment/disability/etc checks but then that is just going back to the point we made in the first paragraph. A perpetuating negative attitude will get one nowhere when it comes to finances, so get rid of this assumption.
The only person responsible for your financial well-being is you, not the government, not your friends, only you. For instance, government checks may help one survive financially but it will never let them accumulate wealth. With the right investments and the assistance of the government a person can get back on their feet and start accumulating wealth.
Assumption #3: I need to avoid failure
Failure can be hard on a lot of people, but the ones that in a sense “get back on the horse” after a failure are always the ones that succeed. If you give up after one financial failure there is no hope for ever accumulating more wealth. Many of America’s and the world’s greatest CEO’s failed miserably at small businesses before hitting success with their current companies.
Even presidents are not above this. Abraham Lincoln ran a failed small business before he ran for president – and changed a nation forever. So give this assumption the boot so you can begin accumulating wealth. Failure should be embraced as life is just an odds game. The more times you try the more times you are guaranteed to succeed. Every time one fails it is just improving the odds for them to succeed the next time.
Assumption #4: Debt is a bad thing
Early in life we all learn the incorrect statement that to have debt is the worst possible decision one can make. After all, if you have debt then you are in someone elses pocket and they in a sense, control you. This is not true however, look at how global politics are run. Nations need debt in order to run successfully, and if you have debt you can still accumulate wealth.
Do not get in a negative spin just because you have debt, just focus on the positive goal of accumulating wealth and your debt will start to disappear. Sometimes, debt is a necessary thing. For instance, while investing in a product one would have to take out a loan and accumulate debt in order for the product to take off. Once the product takes off the person can begin to see returns and pay off that debt.
Assumption #5: Having a good job leads to wealth
It is true that having a good job will lead to a larger paycheck, but that does not always mean wealth. Look at the statistics for bankruptcy’s in the United States. Over half of the people declaring bankruptcy have so-called “good jobs,” it is just that they managed their money poorly. The secret to accumulating wealth is not having a good job, but rather managing the money that comes in from any job successfully.
In the book Creating Wealth by Robert G. Allen, Mr. Allen can show anyone regardless of their career how to properly accumulate wealth. For example, a person with a mediocre job can invest in real estate while still working at their dead-end job. Once the real estate takes off they can sell their properties and have enough wealth to retire on.
Assumption #6: Saving money for retirement
One of the largest setbacks to accumulating wealth in the now (so to speak) is the assumption that everything one saves must go to the retirement fund. This will prevent anyone, even the wealthiest individual, from creating wealth and might even restrict them from having enough wealth to retire on.
With this assumption there are no options left open for investments, or different ways to manage money. One only puts all their extra cash in a retirement fund and that is that. With this attitude there are no avenues left open to create wealth, only a sole path that leads to mediocre wealth and funds. One needs to set aside an amount for retirement, but also have funds to work with so that they may accumulate more funds.
If all of one’s money is going to retirement then nothing is left for them to invest in. One should be using their retirement funds for investments – investments that will see future profits for them to retire on.
Assumption #7: Security is very important to me
While it is true that the more you risk in the game of money the more you stand to make, it can be at times scary to enter a situation where security of one’s investment is very shaky. However, look at the previous statement.
The investments that have the highest returns are the one’s where the risk of failure is high. But if one takes no risks, then one will never accumulate wealth. Some of the wealthiest people in the nation took risks to get where they are at, however the difference is they knew the odds. By reading Creating Wealth by Robert G. Allen one can look at an investment and determine if the odds are good enough to invest in or if the situation looks too good to be true.
For example, a situation involving investing in a product may be too good to be true. One would not want to take the risk of investing in that product. However certain real estate property levels are extremely low right now. One would almost be guaranteed a profit by investing in those real estate properties. Those are the types of risks one should take.
Overall, the process of accumulating wealth can be an easy and fun route for many to take. It is a sad fact that these assumptions mentioned above keep many from enjoying the lifestyle that they dream of.
These common assumptions stifle everyday people from reach their full potential, both financially and personally. However, by reading Creating Wealth and avoiding these pitfalls of assumptions, one can figure out which investments are the ones that can maximize their wealth and which investments to avoid. This can lead to an unlimited amount of wealth and pleasure for the individual.
