From an early age, there are several myths and lies about growing wealth that are drilled into our memory. It can be difficult to break free from this way of thinking. However, some of these misconceptions are based on outdated ideas and limited perspectives. Here is a look at some of the most common lies still being circulated.
5 Common Lies About Growing Wealth
1. Businesses Break Even in the First Year.
There is a common misconception among new business owners that you will be an instant success. However, in reality, plans get delayed, unexpected expenses arise, and it takes time to create a market presence. According to Forbes, the timeline to achieve profitability is closer to 18-24 months. Furthermore, 25% of new business ventures fail in their first year.
The truth is that instant success is very rare. While entrepreneurs are waiting for their breakthrough moment, you must be willing to wait it out, lose money, or even walk away from a failed venture. Many successful businessmen will tell you that had several failures before they finally prospered.
2. All You Need Is a Good Idea.
This mantra lies at the heart of the American Dream that anyone can get rich with the right idea. This is one of those lies about growing wealth that perpetuates itself because there is some truth in it. Unfortunately, not every great idea meets a market need or consumer demand. Not only must the idea be feasible and practical, but most importantly it must be profitable. If no one wants to buy your product, then it will never be successful.
The execution and timing of your business’s launch are also crucial. When you are first finding your legs, expect to invest a ton of man-hours to get it off the ground. You should also make sure you have enough savings to cover your bills and give yourself a cushion. This will allow you to breathe a little as you wait to gain a foothold and break even.
3. You Need High Returns and Savings to Grow Money.
Another myth about growing wealth is that you need high returns and savings to grow your wealth. However, most financial planners will tell you that making steady contributions is a more efficient strategy. Consistent savings is more important than stumbling upon a good investment opportunity. But, don’t ignore a good opportunity when it comes around.
This is also a great lesson to pass on to the next generation. Remember, it is never too early to begin saving and investing. Time is a valuable asset; the sooner you begin, the more money you earn from compounding interest. Even if you start small, you can let your money begin working for you.
4. You Need a Loan to Start a Business.
One of the greatest pitfalls for potential business ideas is the idea that you need a loan to start a business. While some entrepreneurs have a significant amount of startup capital, most just start where they are at and build from there. Instead of quitting your job and focusing solely on the new business, perhaps it is wiser to keep your day job. This will provide a safety net while you establish yourself. Once your business can sustain itself, then it may be time to consider making it your sole source of income.
5. You Can’t Get Rich Off Your Salary.
Another lie about growing wealth is that you will never get rich just off your salary. Although it may be difficult to build enough savings for retirement on your salary alone, you can begin using it for steady investments from an early age. If you invest small portions of your salary, over time it will grow exponentially. The key is to make consistent contributions at regular intervals to ensure steady, continued growth. Diversification will also protect your nest egg and mitigate long-term risks.
The Secret to Growing Wealth
The truth about growing wealth is that there are many roads that can lead you to the same goal. There is no carefully guarded secret among the wealthy about how to get rich. Yet, increasing your wealth begins with the same fundamental lessons. Unfortunately, most people are not willing to take the necessary steps to get there. Instead, they choose to ignore their finances and bad habits rather than take control of them. Growing your personal net worth doesn’t need to be complicated. But, it does require you to take action.
The first step is to determine what your financial situation is. Once you know where you are at, it makes it easier to determine where you want to go. You can start by tracking your spending and sticking to a budget. This basic exercise can help you identify areas for improvement. If you aren’t living below your means, you will never add to your net worth.
Although this is the first step in building wealth, it is not enough to merely break even. Once you learn to live below your means, the next step is to start saving and investing your money. Every extra dollar you have at the end of the month should be put to work for you. Budgeting apps and tools can help you determine how much you need to set aside each to achieve your financial goals.
The final and most critical key to financial success is consistency. It’s started by creating healthy spending and savings habits. Then, it requires you to continue prioritizing them over large, unnecessary expenditures. Making regular contributions to your savings account and investment portfolio will ensure steady and long-term financial growth.
Final Thought About Growing Wealth
When you are making important decisions about your finances, consider your sources. Advice is freely offered with the best of intentions. However, you should take time to do your research and learn to decipher fact from fiction. Identifying lies about growing wealth is a good place to start. And remember, when in doubt you can always seek out professional advice to find the best ways to grow your personal wealth.