Beautifully Frugal: Common Misconceptions About Building Wealth
One misconception I hear daily about building wealth is "investing is only for the rich." This belief couldn't be further from the truth, and it's important to address this misconception society has ingrained in our minds. The wonderful thing about building wealth is anyone can achieve it, no matter your age or income level. I see people every day who some would consider having an “average” income, who truthfully are retiring millionaires through disciplined financial management. The belief normal people can’t build their wealth is primarily due to a lack of education on how to change their financial situation.
As someone who grew up in the lower-middle class, I was taught the key to financial stability was working hard, paying your bills on time, and starting over again the next day. This mindset had me convinced I would never achieve financial wealth or stability, simply because I was not taught how to get there. However, by fostering a sense of curiosity and seeking financial peace, I began to question these myths and actively debunk them.
This month, I want to dive deeper into these myths I once believed, drawing from the largest study on millionaires conducted by Ramsey Solutions. This study involved interviewing more than 10,000 millionaires to understand their habits, discipline, and the strategies which led to their wealth.
Myth #1: Wealthy People Have High Incomes
Contrary to popular belief, a high income is not the sole determining factor in building wealth. While a higher income does help accelerate the wealth-building process, it's more important to utilize this income effectively by investing, rather than spending on material possessions which give off the appearance of wealth. Many high-income earners find themselves burdened by excessive monthly payments, which hinder their progress towards true wealth. It's not about how much you earn; it's about what you do with it.
Myth #2: You Must Take Big Risks to Build Wealth
According to the Ramsey Solutions study, the majority of millionaires (eight out of 10) invested in their company's 401(k) retirement plan. This indicates the overnight success or striking it rich through a groundbreaking idea is rare. It's crucial to recognize these stories of instant wealth or entrepreneurial success are not representative of the norm. Does this happen occasionally? Absolutely, yet this is an exception, not the rule. Building wealth tends to be a gradual process which requires patience and consistent effort.
Myth #3: Building Wealth is a Quick Process
Society often glamorizes the idea of overnight success and quick riches, leading people to believe wealth is quickly attained. This misconception causes individuals to have unrealistic expectations and become discouraged when they don’t achieve instant wealth themselves. Building wealth requires sacrifice and delayed gratification. It involves making smart financial
decisions, like investing in assets which appreciate over time rather than spending money on unnecessary luxury items. This can be a difficult concept for many to grasp, as they are constantly bombarded with advertisements and societal pressures to spend their money on material things. It's important to have a vision and set achievable goals, continuously working towards them over an extended period of time. This requires discipline and perseverance, as setbacks and obstacles are bound to occur along the way.
Overall, building wealth is a journey which requires dedication, patience, and a long-term perspective. It's important to understand it's not a race; overnight success stories happen, however, they are rare. By staying committed, making wise financial decisions, and persevering through challenges, individuals can gradually accumulate wealth and achieve their financial goals.
Myth #4: You Need a Specific Education or Background to Build Wealth
Many successful individuals have achieved wealth despite not having a specific educational or professional background. While certain fields may provide advantageous opportunities or knowledge, they do not determine one’s ability to build wealth. In the Ramsey Solutions national study of millionaires, the top five career fields of the millionaires studied were: Engineer, Accountant, Teacher, Management, and Attorneys. Teachers are easily one of the most underpaid career fields on this list, yet they are in the top five careers for millionaires.
Why is that? Teachers have a drive and a heart to learn. However, it is important to note while these factors contribute to teachers’ success in building wealth, they are applicable to individuals in any career field. The willingness to learn, adapt, and make informed financial decisions is a universal trait for successful individuals, regardless of their educational or professional background.
Take Action to Combat These Myths
It's crucial to challenge these myths and understand building wealth is a personal and adaptable process. Developing a well-defined financial plan, maintaining consistency, and seeking guidance from trusted financial professionals can help guide you on your way to building wealth.
If you are ready to start building wealth today, please don’t hesitate to reach out to our team of Trusted Wealth Advisors. KerberRose Wealth Management has a passion for helping everyone achieve financial freedom through easy opportunities to grow their wealth.
