Money. It’s an uncomfortable topic for many of us to think and talk freely about in our daily lives (ESPECIALLY for myself). Savings, bank accounts, stocks, student loans, and 401Ks are all words that I’d like to avoid entirely (SPECIFICALLY “student loans”–here’s looking at you, Manhattan College). However, that’s just not possible. Our futures depend on understanding money and making it work for us.
So more recently, I’ve decided that I MIGHT want to start making better financial choices. Enter David Bach’s THE LATTE FACTOR, which I read at the perfect time. His chapter on myths around money hit me especially hard because it made me realize that the “facts” I thought I knew regarding finances are actually all not entirely true. I wonder if you’ll feel the same?
Ladies and gentlemen, I’ve decided to break these myths down for you in relation to my experience with them and my initial thoughts on Bach’s ideas. Maybe my revelations will help you too…
#1. Make more money and you’ll be rich.
This is an extremely common mindset that a lot of us can relate to when it comes to our finances. We think the solution to all of our problems can be solved with more money. For instance, when I go through my monthly credit card bills, student loan payments, and rent, I’m often left thinking: “Wow, if I had an extra grand, I could do SO much.” Well, THE LATTE FACTOR makes it clear that this type of thinking is how we get ourselves into trouble.
My issue (like many others) is that I always find myself spending whatever leftover money I have after paying my bills on leisurely things like nice dinners, clothes, going out to bars with friends, etc. A prime example of this spending behavior is when I received my first big tax return. I (mistakenly) believed I was ROLLING in money with the extra grand that wound up in my bank account. So, as any “mature” 24-year-old adult would do, I spent the money on concert tickets for a Jonas Brothers concert (don’t judge me), a trip to Disney, and other random things that I barely remember purchasing, honestly.
Essentially what I’m saying is I realized that if I did have an extra grand, that money would also be spent on unnecessary luxury activities and items. So, I’m basically broke regardless. As THE LATTE FACTOR explains, often our main issue isn’t with the amount of money we’re making, but our inability to save. So, in order to debunk this theory that if you “make more money, you’ll be rich,” we all have to adjust our financial perspectives.
#2. It takes money to make money.
Truth be told, I was at first slightly confused by this money myth. Don’t you need money to make money? But as I learned, the short answer to this question is no. Most people think you need to already have a decent stack of money in the bank in order to build upon it. That to make money, you need to invest the money you already have saved into funds, stocks, etc. and only THEN will you build interest and increase your funds. While this is a great strategy to make more money overall, unfortunately, it’s not a feasible option for many (like myself, who still gets excited when I find spare change on the streets).
David Bach debunks this entire theory by explaining how you can make money even if you have hardly anything to your name. In order to make money, you literally just need to save. This means that if you made $900 in a week, working 40 hours, then you should at the very least put aside $1 into your savings each week. You can put that hard-earned dollar in between the cushions of your old couch, the back of your freezer, or wherever you won’t find the money so you don’t end up spending it.
If you keep up with this money saving technique for a full year, then you’re going to find approximately $52 that you forgot you even had! I realize that $52 doesn’t seem like much (I can get bottomless brunch for that amount of cash). HOWEVER, it’s proof that one singular dollar can actually make you some extra money. THE LATTE FACTOR really opened my eyes to the fact that you don’t actually need to be making tons and tons of dollar signs and trying to hijack the stock market system in order to build yourself some sort of financial cushion.
#3. Someone else will take care of you.
Okay, so I am MORE than guilty than believing this money myth. I’ve often found myself joking around to my friends that I don’t need to save money because I’ll just marry rich and it’ll be fine that I spent my last remaining $30 on frozen margaritas (we’ve all been there, right?). Well, when I was reading THE LATTE FACTOR, I was hit with the hard truth that you can’t strictly depend on others in order to build yourself a financial safety net. Unfortunately, people can leave our lives at any possible moment, so relying on others for money is a VERY, VERY flawed system of living. The only person we can truly rely on financially is ourself, and we all need to accept this as a fact. So, start budgeting, saving, and investing now so that you can afford that nice retirement home on the beach in the Bahamas ALL BY YOURSELF. (And yes, by “you,” I mean “me.”)
Want more? Learn David Bach’s 3 secrets to financial freedom in the video below:
If you’re in need of financial advice too (and aren’t we all?), check out THE LATTE FACTOR by David Bach for more practical tips on living rich now.
Plus, for more finance secrets: 5 Personal Finance Books to Take You From Broke to Not So Broke