3 Common Misconceptions About Wealth

Many financial experts seem to agree that you are ready to quit your job and retire to do the things you like at any age, for as long as no more than 30% of your monthly take home pay is from your salary or job related pay.

As the assumption goes, the other 70% or more of your income should be proceeds from your investments or income-generating assets.

This requirement presupposes you were an active investor right from the time you started earning money, and you were able to create a steady full-time income on a part-time basis, which is very unlikely.

Wealth is not a game of luck. When you win, it is because you made the right decisions.

Here are three common misconceptions about wealth that could easily prevent you from living a happier more fulfilling life:

1.  The belief that working for someone else will make you wealthy

Depending on a salary alone to make you rich is a futile strategy, because when you lose your job, your income disappears but your expenses don’t.

Your expenses can actually grow rapidly because you will find yourself borrowing money to meet your basic needs.

Conversely, if your expenses doubled tomorrow, your employer is unlikely to give you a raise, forcing you to get into debt just to stay afloat.

The sad truth is that a majority of people find themselves in a situation where their employer pays them just enough to keep them from quitting and by the same token, they put in the minimum required effort to avoid being fired.

If you don’t enjoy what you do, you can’t do it well.

Until you realize you are caught in a trap, you will fail to do what it takes to mitigate the risk of relying on a company to keep you employed.

2.  The belief that academic qualifications automatically entitle you to wealth

History is rich with examples of successful entrepreneurs who became wealthy with little or no formal schooling, yet multitudes of people who have specialist university degrees struggle to make ends meet.

That is not to say that formal schooling is irrelevant. However, the formal education system prepares one for a career of employment, and fails to address the link between income and wealth.

Choosing and settling for a life of work that will keep you from getting ahead financially usually arises out of conformity.

If you keep thinking like everyone else does, you’ll have what everyone else has.

Financial freedom usually results from the relentless pursuit of a pre-determined goal, as opposed to an accidental happening.

If you believe that formal schooling automatically entitles you to wealth, you may end up tolerating a life of mediocrity, spending the vast majority of your life working for money, only to retire poor with an array of degrees and diplomas.

3.  Failing to appreciate that success and ‘playing it safe’ are mutually exclusive

Deterred by the possibility of failure in trying to achieve a worthwhile goal, we are often tempted to play it safe by reserving an escape route, which in most cases turns out to be self-defeating.

It is almost impossible to succeed in any undertaking with one foot constantly on the brake pedal.

Unless you believe in yourself, you will not be motivated to pursue your goals with confidence.

When things do not work out as planned, you will end up like one of those people who envy others’ achievements but are unwilling to do what is takes to achieve similar results.

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