Some beliefs people have about money are naïve at the very least, and dangerous at the worst. In today’s video, I’ll share with you 5 dangerous beliefs people have about money that keeps them poor or dangerous. Before we get to it, be sure to subscribe to After School Africa for more insightful videos like this.
1. To gain, someone has to lose
This belief comes in different versions; ‘you have to take from others to make money’; ‘someone has to lose for you to gain’. This is an ignorant and dangerous belief to have about money. It comes from a place of scarcity. The belief that there is a limited supply of wealth; so each time someone gains money, someone loses. This belief turns people into soulless predators when it comes to dealing with money. The only place this applies is in sports where, to an extent, the winner takes all. In the real world, one single winner doesn’t take all. Here is a simple situation to illustrate that no one has to lose for someone to gain.
A farmer leases a farm from a land owner and grows corn. The farmer sells his corn to a sourcing agribusiness and makes profit. The agribusiness sells the corn at a higher price to a company like Nestle and makes profit after paying employees and other expenses. Nestle makes Corn Flakes cereal. They sell it to the grocery store at a higher price and they make profit after paying employees and other expenses. The grocery store sells it to everyone at a higher price and makes a profit. Everyone gets to eat corn flakes and nourish their bodies profitably. So who lost in that scenario? No one lost. Similar instances apply to most economic activities. Will it always work out this way? Not always. There will often be casualties and losses. That is why you need to be smart and learn to manage risks.
Simply because one person gains $1 million doesn’t mean that another person has lost a million dollar. When you pay for things you need or want, like corn flakes, food items, cloths, internet subscription and many other things that make your life easier, do you consider that as lose? You got what you wanted and the company selling these products got what they want – your money. That’s a win-win.
2. The Rich are greedy people who steal from the poor
The belief that someone has to lose for someone else to gain feeds the belief that every rich person is a greedy monster who steals from the poor to get rich. This is also a scarcity and dangerous mindset. A lot of evil and atrocities have been committed throughout history because of this believe. For instance, in the early 1900s in Russia, the masses were made to believe that the rich farmers – who actually started out as slaves and grew their farms to feed the larger population – had stolen from them, the poor. The poor masses turned on these farmers, took all their belongings, killed and sent them on exile. The consequence of this action was that over 6 million people starved to death few years later, due to food shortage.
People with this absolute mindset fail to understand the dynamics of how money is created. There is an unlimited abundance of created and potential wealth. For instance, most of the money in our economy is created by banks, in the form of bank deposits. Banks create new money whenever they make loans. In fact, 97% of the money in the economy today exists as bank deposits, whilst just 3% is physical cash. Each time someone takes a loan of say $100,000 from the bank or from an investor, $100,000 debt and $100,000 credit is created. So economically, the world just added new $100,000 to its wealth. And this happens multiple times every day.
There are many legitimately rich people who understand the principles of money and worked hard and smart to create wealth. They take loans from banks and investors to create things other people need. And make money selling them. There are also a group of rich people who started out poor.
Again, take a moment and look around you. Count the number of things you have that makes your life easier; your phone, laptop, books, TV, clothe, wristwatch. It’s only reasonable to accept that the people who create things that are beneficial to the society deserve to be abundantly rewarded. This acceptance can change your mind set for good. Some rich people are predators while some are kindhearted. Some poor members of the society are kindhearted, whilst others are cruel.
3. “I can save my way to wealth”
You can save money for emergencies, for near future projects, or for later investment. But you can never save money to grow wealthy. Money is not designed to be kept. It is designed to circulate and grow. In fact, you lose money when you save money. For instance, if you live in Nigeria and saved N50,000 in a bank every month from the year 2000 to 2020 with a 3 percent interest rate. In 2020, you would have saved a total of N12,000,000 and gained a total interest of about N4.5 million. You may feel like you have made money. But when you factor in the average inflation rate of 12 percent in the country, you’ll discover that you actually lost 9 percent of your money every year. If you also consider the naira to dollar exchange rate over this period, mehn, you’ve lost big time. This is why being able to save money, while important, is not enough. At the bare minimum, you should preserve the value of your money by investing where you can earn above the inflation rate. The idea that money loses value when kept is why, for financially intelligent people, the simple reason to save or keep money is for an emergency, near future projects or to invest later.
4. You can only get rich by hitting it big
These are the people who believe rich and successful people are lucky people. This belief compels people to see no reason to save from the small money they make. No reason to build and grow from little. It takes away the responsibility of getting there through diligent hard and smart work. It may be okay to continue on the get-rich-quick one-hit-wonder. But in the meantime, put in your best work at what you do, save what you can, and invest as well. People don’t get rich by accident or mere luck.
5. ‘Money is the root of all evil’
This cliqued quote was taken and modified from a passage in the bible; “The love of money is the root of all evil”. Then someone decided to throw away the first three words and left us with, ‘money is the root of all evil’
This modified phrase has kept a lot of people in poverty. They say things like “money is nothing”, “money is for greedy people”. To begin with, money is just a tool; a very useful one at that. It can be a tool for great good and it can be a tool for great evil. Saying money is evil is just like saying human beings are evil; so you don’t want to have anything to do with human beings because they are evil. There are people who do great good and there are people who do great evil. You can’t help anyone reasonably without money; whether that’s your own money or someone else’s money. It’s the love of money that is the root of all evil; not money.
Since you are still here, here is a bonus…
6. What you eat is all you own
This is the philosophy of people who only live to wine and dine. They believe we are all going to die. There is no point in planning and saving for tomorrow. So let’s just eat, drink, and party; for tomorrow we die. Unless you are planning to die soon and don’t have people you are responsible to, this is a dangerous way to live. Life happens. Emergencies occur when you least expect them. And you may be surprised to live into your 90s or 100. There is more to life than making merry. A sense of responsibility and moderation is an important virtue to have.
Someone doesn’t have to lose for you to gain. You can grow rich from win-win outcomes. Rich people are not always greedy people stealing from the poor. You can’t save your way to wealth. Real wealth is built over time. There is no overnight success. Money is not the root of evil; the love of money is. There is more to life than making merry.
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