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Beliefs About Money


I occasionally write on beliefs about money in my various newsletters and on my websites. It is fascinating to me how many things are believed, both consciously and unconsciously, about money and financial matters, and yet how rarely these beliefs are examined. Today I want to look at limiting beliefs that keep people from succeeding. We can see that there are many ways to succeed financially, and many of those ways are not that difficult to teach. But that isn't enough in many cases, and the problem is often in the things we think about money and making a profit.

For example, some people feel or believe on some deep level that money is "dirty" or "immoral," even if they don't express that thought consciously. If you suspect that unconscious feelings and beliefs like this may be holding you back, you may need to change your mind. Let's start the process of change with the following explanation. Hopefully it will create a new perspective for you.

How Is Wealth Created?

People often misunderstand how money or wealth is created. You can see this in the belief that wealth is limited, as expressed in the saying "a piece of the pie." But in reality wealth is not necessarily like a pie to be divided up, and it is very important to understand this.

If the wealth of the world was like a pie, if it was a set amount, then of course everything you gained would be at the expense of others. A pie can only be split so many ways after all. And it certainly wouldn't be a very nice feeling to get a bigger piece if it meant that an equal share of suffering fell onto others. The guilt that this idea causes may get in the way of many people's success. There are also many horrible public policies that result from this pie metaphor, because it's based on an ignorance of basic economics.

Now for the good news: This idea is mostly false (almost no idea can be expressed in a way that is 100% true or false). Wealth is not a static quantity of goods or money. It is something forever imagined and re-imagined in the mind of man and then created in the world.

The average poor person in America today has flush toilets, hot water in the shower, and often a car. These are things which were unknown to the wealthiest individuals of centuries past. This is not meant as an argument against the reality of poverty, but as a reminder that things have gotten better. In fact, there is no unresolvable problem that prevents the whole planet from someday being wealthy. Poverty rates have already been declining for generations now, and it is entirely possible that someday poverty will not exist. Muhammad Yunus, the founder of Grameen Bank - which has lent billions of dollars to millions of poor people to help them develop businesses - agrees with this idea. He has suggested that there will come a time (possibly in this century) when extreme poverty will be something we see only in museum exhibits.

Obviously there is more wealth now than in the past. Let's take a closer look at how that happens.

Suppose a potato farmer learns how to produce twice as many potatoes in the same amount of time and with the same land, using new techniques or machinery. Suddenly there is more wealth in the world, and it wasn't at anyone's expense. If another person creates art, the potato farmer now has more potatoes to trade for it, or to sell to make money to buy that art. Both men are now richer. If a house cleaner buys tools and chemicals that make him more efficient, he makes more money for his time when he cleans the home of the wealthy potato farmer. He, the farmer, and the makers of the tools and chemicals are all wealthier as a result. This is the essence of wealth creation and distribution.

Wealth is created. When you understand the value that you help create, you will feel better about it, and the result will be a change in thinking that changes your future. Even in areas that seem to be zero-sum games, like buying and selling a house for a profit, you are often creating value: You are helping a seller and a buyer get what they want.

As long as you do not use force or fraud to get what you want in life, you generally have to create value to become wealthy. If there is no value created, no person has a reason (nor an obligation) to give you money or other good things in exchange. By definition then, if you conduct yourself honestly, and you get rich, you have created great value in the world. Start with that as the basis of what you believe about money.

More Beliefs About Money

Here are three questionable beliefs or feelings about money that are fairly common. I also have included an alternate perspective you might replace each one with.

Money Is Bad - It can be used for evil or good. Focus on examples of the latter to change your perspective. Oh, and the Bible says "The love of money is the root of all evil." Putting money ahead of one's spiritual salvation is the issue. Regardless of faith, you can see that there are things more important than money. That's a good reason to make some; to help us with our higher values. Here is a better belief: Money Is a Powerful Tool and I Choose How to Use It

Money Is Scarce - A pervasive and useless idea, as discussed above. Wealth is created, and as more real things are created, more money is printed to represent these things. Money is more abundant now than ever before, because there are more ideas than ever, which has lead to an abundance of creation of all sorts. Look around and you will see that there is no scarcity of money. Here is a better belief: Money Is Abundant

Business Is Dirty - Some see business as taking advantage of people, and many particular businesses do act in unethical ways. But this does not mean that doing business is itself unethical. Fortunately, when businesses do cheat employees or customers they often suffer the consequences. Consider the salesman who is "so good he could sell ice in the arctic." No matter how persuasive, he will probably sell that ice just once, and then suffer the consequences of not properly serving others.

Business serves people, and profit is the reward for doing it well. When a company doesn't properly serve consumers, it usually fails unless governments exclude competition or require people to purchase their products and services. To succeed, a business serves customer's interests as defined by the dollars those customers choose to spend. Even when done only for profit a free and fair market forces companies to think of how to best serve others. If one company does not offer what people want, after all, people do not have to buy their products, and another company will very likely find a way to serve those potential customers in order to make money from them.

Business should be all about honesty. As it is, not all players are honest, but we often learn about the dishonest ones when their companies dramatically fail. But in general honesty is very good for bringing customers back again and again. In other words it is profitable to treat customers well, as good business people know.

The products and services we value, from medicine to wonderful music to paper and food , are provided by businesses. Business people had to use their minds, money and resources to figure a way to provide what we need, and all that is asked for this service is a price we are willing to pay. Yes, willing, because if not, we wouldn't pay it, right? So when you think of business, try to see it as the noble pursuit it often is and always can be. Here's a better belief: Business Can and Should Serve People

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