Misleading millionaire myths keeping you poor

The extremely wealthy in society often seem like aliens to the rest of the population. But the truth is most of the super wealthy don’t fit into the assumptions most people have. Here are some common myths about rich people that might be keeping you from becoming one of them.

Many people think of millionaires as some jerks who got lucky to be born with silver spoons in their mouths. It’s true- some rich people come from old money. Families like the Rockefellers, Vanderbilts, the Kennedys, and the British Royal family come to mind when you think of generational wealth and wealthy dynasties. However, studies have shown only about 20 per cent of millionaires got their wealth through inheritance.

Believing that others only became rich from generational wealth is particularly toxic as it removes the incentive to work hard and amass your own wealth. Realise that most millionaires started off no better than you. They made their money through years and decades of hard work, investments, and self-development. Key examples of the many millionaires who came from humble beginnings include Oprah Winfrey, Starbucks founder Howard Schultz, designer Ralph Lauren, Whatsapp founder Jan Koum and Russian tycoon and Chelsea Football Club owner Roman Abramovich.

Believing that millionaires became so through random good luck makes you feel better about yourself, right? Unfortunately, that belief isn’t totally true. Luck is definitely a factor in wealth creation, but it is the kind of luck which comes to those who have prepared themselves for it. It’s about having the right skills, knowing the right people, and having the resources needed to grasp these opportunities when they present themselves.

This unique type of luck is a by-product of their hard work, persistence, and good habits. In addition, many millionaires have failed at least once in business, but instead of giving up, they picked themselves up and tried again. You can also become “lucky” through putting yourself in places and situations where it will find you.

The higher the risk the greater the reward, a common saying goes. Many people believe that millionaires attained their wealth by making high-risk investments such as Bitcoin, penny stocks, and day-trading.  This kind of thinking is one of the reasons many people fall prey to pyramid schemes and others give up on ever being wealthy.

While there are some rich people who made money through taking huge risks, they are the exception to the rule.  For instance, Elon Musk invested his $165 million from the sale of his interest in PayPal in launching SpaceX and Tesla. But majority of millionaires made their wealth through living beneath their means and saving, careful investing in traditional assets, and occasionally investing in riskier ventures.

Do you believe that rich people are more educated than you and they went to better schools? You will be surprised to learn that 15 per cent of Forbes 400 Richest People- all of them dollar billionaires- don’t even have a college degree! Steve Siebold, a self-made millionaire and author of How Rich People Think, conducted a study on more than 1,200 of the world’s wealthiest people and found that most didn’t think a formal education was necessary.

“Many world-class performers have little formal education, and have amassed their wealth through acquisition and subsequent sale of specific knowledge. Meanwhile, the masses are convinced that master’s degrees and doctorates are the way to wealth,” Siebold writes.

To become rich, stop thinking that you need to have degrees. Instead focus on acquiring knowledge and expertise in your chosen field. The education you acquired in class will only take you part of the way, you must keep educating yourself.

When you think of the extremely wealthy, you probably envision shiny luxury cars, private jets, and yachts. The truth is that the really rich tend to be frugal as well- which is a trait which probably contributed to their getting so rich in the first place. Despite his net worth of around $85 billion, Warren Buffet lives in a modest house he bought in 1958 for only $31,500. Richard Branson also once said that displays of wealth embarrass him.

The rich commit to saving a large portion of their incomes and stick to their budgets. According to Chris Hogan, author of Everyday Millionaires: How Ordinary People Built Extraordinary Wealth and How You Can Too, 92 per cent of the millionaires he surveyed developed a long term plan for their money. They avoid distractions and ‘shiny object syndrome’ the general population suffers from because they’re focused on their long-term wealth-building plan.

“It’s easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God,” Jesus told his disciples. Many people interpret these words as “the rich are evil and uncharitable”.

The wealthy are often characterised as selfish and greedy. But studies show that many super-rich contribute 5-10 per cent of their net income to charity. Their philanthropy supports children’s homes, food banks, homeless shelters, and scholarships for needy students. They also regularly volunteer their time to charity organisations either through running the charities, serving as board members, or being committee members.

Get used to giving, even if you’re not rich now. Giving activates the reward centres in the brain, making the giver happier. In their book Happy Money: The Science of Happier Spending, professors Elizabeth Dunn and Michael Norton found that those who donated to charity, regardless of their income level, reported feeling happier and wealthier.