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3 Scary Misconceptions About Money

3 Scary Misconceptions About Money

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    It’s strange that for a society that’s so focused on making money and owning assets, we have some pretty unusual and downright scary approaches to the stuff and how it comes into our possession. Money doesn’t grow on trees, but we give our children and ourselves the idea that it’s nearly unattainable to make enough of it to live the way we want. Here are three of the common misconceptions that our society taught me that my own experiences in business have shattered.

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    It Takes Money to Make Money

    Having money can make it easier to make more money, properly utilized. If not for that fact, venture capital wouldn’t be a big industry. However, if you don’t have money, it doesn’t mean you can’t make any. Plenty of big earners today started off bootstrapping. I bootstrapped my business and it worked.

    Perhaps it’s more convenient to make money when you’ve got money but in no way is it a prerequisite. You just need to put in some effort, some brains and be good at what you do.

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    Personally, I’m of the opposite opinion: if you can acquire funding that you need to pay back later, you’re not in the best position. The best position is to bootstrap your operation and build it up from small but affordable beginnings. You don’t want to be owing anything to anyone at any point; perhaps the “it’s cool to get into debt even if you don’t really have to” myth should be shattered in another article!

    Evidently if you want to open a retail business you’ll need funding, but there are plenty of business plans that can be thought up and executed without the need for capital or loans, which means the old saying that it takes money to make money is not true.

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    Time and Money are Proportionally Related

    This is a very common one. Because the industrial age and the model of employment it brought about is based on a proportional relationship between time and money we tend to associate that relationship with money, rather than with employment.

    So let’s get that clear: the relationship between time and money is imposed by employment, not the idea of money itself.

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    If you’re clever with your business plan, you can create something that makes money based on other things, like product sales. Look at online membership training sites as an example — if you can find 100 customers for a $100 a month program you’ve made $10,000 (from which you subtract your marketing and hosting expenses, among any others). I’m not insinuating it is easy to make $10,000 a month but I am saying that your income doesn’t have to be proportional to your time investment.

    Money is the Root of Evil

    This old proverb is a pet peeve of mine because it and the attitudes it engenders are the seeds of what make people averse to making money. Seeing money as some kind of enemy, or something that is difficult to work with, is like setting yourself up not to make any. Money is a tool like any other and these emotional connotations do not assist in the acquisition or use of that tool.

    Once you begin to see it for what it is, your business decisions can be based in reality and have a level of objectivity associated with them. Many people make stupid business decisions because they have developed certain mindsets regarding cash and these need to be put to the back of your mind. Fears about losing money, or the idea that money is evil, simply don’t help anyone.

    Change Your Mind

    If you’ve fallen prey to these misconceptions, it isn’t too late to change your mind. It can be hard to escape from old mindsets and habits imposed on you by the culture you live in, but that doesn’t make it impossible. I don’t subscribe to the “it’s only worth doing if it’s difficult” mindset but in this case, the difficult is certainly worth doing!

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    Last Updated on March 4, 2019

    How to Use Credit Cards While Staying Out of Debt

    How to Use Credit Cards While Staying Out of Debt

    Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

    I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

    Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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    Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

    Do Not Treat Credit Cards as Your Funding Sources

    Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

    I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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    I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

    If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

    Make Sure to Always Pay Off Balances in Full Each Month

    The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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    Using Credit Cards with Rewards

    Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

    You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

    I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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    So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

    What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

    Featured photo credit: Artem Bali via unsplash.com

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