You’ve probably heard the saying about rich people being born with silver spoons in their mouths. Of course, the wealthy don’t literally come into the world with dinner utensils under their tongues. Still, being born to a rich family does have its advantages.
While there is truth to some popular money idioms, others are little more than old wives’ tales. In fact, many of us are told lies about money that not only skew our thinking but actually affect our ability to grow wealth. Here are some money sayings that we’ve come to accept as sage money advice — even though they’re actually false.
1. ‘The rich just get richer.’
If you’re wealthy, you have plenty of investment power available to help you get richer. But what about the next generation — will your kids make piles of money with your hard-earned cash?
Brian Davis, real estate investor and co-founder of SparkRental.com, an online software service for the rental real estate market, said, “In the first generation, ‘the rich just get richer’ might be true, but spoiled children almost always end up squandering the family fortune.”
He went on to cite a study by The Williams Group, which found that 70 percent of wealthy families have squandered the family wealth by the second generation. And 90 percent have lost it by the third.
2. ‘You must have money in order to make money.’
Sure, it’s easier to make money if you have money to invest. But you can also save money to invest or use to start a small business.
David Bakke of the personal finance site Money Crashers shared his suggestions for building some working capital.
“You can sell your unneeded stuff on eBay or Amazon in order to generate cash,” said Bakke. “Also, if you pay your credit card balances off in full each month, you should be putting as much as you can on your credit cards in order to earn cash back.” These funds can be socked away until you have saved enough to invest or start a business.
Additionally, the SBA recommends that aspiring business owners cut costs by buying in bulk and paying down debt to avoid spending more on interest. You can also accelerate your timeline for opening a small business by saving money from tax returns, commission checks, raises and bonuses.
3. ‘A home is an investment.’
Investing in real estate is a common money tip, especially here in the U.S. where the American dream is predicated upon home ownership. Unfortunately, this belief often causes people to spend money they don’t have.
While a home might be a good investment for those who are financially able to afford one, purchasing property can put undue pressure on an ill-prepared buyer.
“Sure, your home might eventually appreciate in value,” said Davis. “But even if it does, will that appreciation cover your interest payments, property taxes, insurance premiums, maintenance and repairs? Probably not.”
4. ‘You need to be born with a silver spoon in your mouth to be rich.’
As mentioned earlier, people often assume that great wealth is impossible to achieve if you aren’t born into it. However, if you work hard and are smart with your money, there is the potential to become rich, regardless of where you started.
Jason Bond, a small cap stock expert and investment instructor at Jason Bond Picks, teaches his students to work their way up the ladder like he did. After spending nearly $100,000 on an education, Bond was struggling to make ends meet with his $34,000 teaching salary and money from odd jobs.
“There I was with a master’s in education, working three jobs and picking cans,” said Bond. “I taught myself to trade stocks, going for 5 percent to 20 percent profit on speculative stocks within one to four days, putting no more than one-fifth of my portfolio into any swing trade. I made back the money I spent on loans and then some in under one year. Now, I teach my students to do the same.”
5. ‘Money burns a hole in your pocket.’
This common money idiom refers to people’s inability to hold on to money once it comes their way. Rather than stockpiling extra money for the future, many of us immediately start wondering how we can spend our newfound cash. Fortunately, with a little behavior modification and financial planning, this saying doesn’t have to prove true.
Clint Camua, a certified financial planner and vice president of EP Wealth Advisors, advises consumers to develop the ability to control spending early in life.
“If this tendency to spend is not curbed, then it could be tough for someone to develop the proper habits of saving for the future,” he said. “It is no surprise that people are ill prepared for retirement.”
Getting your spending habits under control could help keep your money in your pocket — or, better yet, your bank account — where it belongs.
6. ‘Money doesn’t buy you happiness.’
Despite the stories about miserable lottery winners and even more miserable celebrities, society remains convinced that money equals happiness.
“Whenever I hear ‘Money doesn’t buy you happiness,’ I think to myself, well if money doesn’t buy you happiness, then I guess poverty must be the answer to our unhappy woes,” said Vic Patel, founder of the education and training site, Forex Training Group. “No one would argue that money alone can buy you happiness. But in the same light, neither can the lack of money buy you happiness.”
According to a study by psychologists from Michigan State University and the University of British Columbia, while wealth could be attributed to less daily sadness than lack of money, it was not proven to contribute to more daily happiness.
It seems the jury’s still out on this particular saying.
From GoBankingRates.com: Lies You’ve Been Told About Money