The Core of the Cows
9 Myths About Money & Prosperity
Myth 1: Scarcity Should Drive The Marketplace
The marketplace is driven by the notion that resources are limited and the world is a zero-sum game: anything that another wins is no longer available to all others. But this simply isnt true. We must put value on people, not things. We should seek win-win situations, not win-lose. Abundance, expansion, and reproduction is the natural state of the universe. Even if resources are finite, scarce resources plus human ingenuity equals abundant resources.
Myth 2: You’re In It For The Long Haul
Were told to accumulate wealth by letting our investments sit forever, such as with a 401K, to diversify, invest according to our risk tolerance, and never to utilize our principal. In a few decades, our investment should have multiplied so many times that we can live off the interest. So why is it a failed concept? Its based on gambling, not investing. Further, this type of investment is often based on a calculation that doesnt always add up. Plus it severely limits productivity by teaching that we have to wait 30 years to enjoy life; it is based on the misguided hope of futurism rather than maximizing the present, creating a dilemma that leads to inaction or limited action.
Myth 3: Financial Security
Security is perceived as coming from financial products, the government, corporations or health and retirement benefits. However, this type of thinking is destructive and debilitating because it leads to an entitlement mentality. It keeps us working in conditions that dont bring us happiness in the name of security, and it gives us a false sense of peace and security that we come to depend on.
Myth 4: Money Is Power
On one side of the money coin, were told one must have assets to build on, otherwise theyll remain stuck. But this runs contradictory to the belief each of us can create value and capitalize on our ideas, energy, or non-financial resources. Broke people think they need to start with money in order to end up with money, so they remain broke. This is why they gamble so much “ they have nothing, so they want something for nothing, from nothing. On the other side of the coin it is essential to realize money has no intrinsic value — to hate it or love it doesnt make money good or bad. The phrase œMoney is the root of all evil was perpetuated by a misunderstanding of biblical quotes and solidified by the belief that capitalists exploit workers. If money is a tool of production, used to facilitate efficient and effective exchange, then how can this even remotely be evil? The myth is paralyzing us because we want more money but are afraid to pursue it; and it turns our brains off when we settle for the lie that money isnt important.
Myth 5: High Risk Equals High Returns
There are no inherently risky investments; there are only risky investors. People make an investment safe or risky. Everything carries risk if we arent educated about the investment. And who defines whats risky “ for whom? Never accept the propaganda that you must be willing to stomach high risks in order to achieve high returns. The truth is, the better you can mitigate your risks to near zero, the higher your returns.
Myth 6: Self-Insurance
Too many people believe in only buying the minimum insurance coverage with the lowest premiums, and to stop carrying various insurance once we accumulate enough assets to be self-insured. But what should be done, for peace of mind and maximum protection, is buy all the insurance you can get. The more assets you have, the more insurance you need.
Myth 7: Avoid Debt Like the Plague
People are not taught the true definition of debt. Not all borrowing is debt. Debt is a function of assets minus liabilities, where if there are more liabilities than assets a person would be in debt. So it is a function in relation to the corresponding asset that you have when borrowing. Going in to credit card debt to support an out-of-control consumer addiction would be misguided and would create debt. Bottom-line, its okay to owe money if theres a greater or equal asset acquired through borrowing.
Myth 8: A Penny Saved Is A Penny Earned
We too often base our decisions on price, much to the exclusion of all other factors. Instead, we should look at other factors such as value “ both of the product or service to our lives and of how its creation gives value to society at large. Price is certainly a factor to buy or not, but we should still compensate the manufacturer for the value we will receive, according to our perception, rather than to win at their expense by getting them to lower the price.
Myth 9: It’s All About The Numbers
We make too many financial decisions by numbers. The problem is numbers alone can lie and dont often tell the whole story. Stats can be presented in any way and given any context in order to convince people of things. But stats are a trivial part of reality at best, and more often than not are considerably misleading.
March 4th, 2009 at 5:58 pm
Garrett, I enjoyed reading your blog. As I said when we met in Phoenix recently, I am eager to read your book. This post is an excellent stimulant to send me running to the bookstore to get the rest of your message.
Shallie Bey
Smarter Small Business Blog
May 8th, 2009 at 7:41 pm
Garrett,
Your insights are a true inspiration.
Thanks,
Travis
May 25th, 2009 at 8:05 am
I just sat on the plane next to someone reading Killing Sacred Cows. Funny how small the world can be. Great summary on the myths!
May 28th, 2009 at 7:07 pm
Yes, oh yes! It’s so nice to hear someone else decrying all the garbage we are taught.
Financial education is SO important, especially now, and so rare. Thanks for being part of the enlightenment.
Continued success to you, Garrett.
Shauna