Back when I just started University, I had never thought much about money other than it was a way to get different items. To me, it was a replacement of the barter trade system where we trade goods for goods; nothing more. Frankly, my money sense and financial IQ was zero; a dangerous playing field to say the least! This post will cover the misconceptions about money that I had and my mindset in different situations and points of life. Some may be familiar or you could even have the same beliefs! I’m not saying the outcome is right; it’s only right for me. Application to others should be taken with a pinch of salt.
1. I’ll earn more of it later.
Imagine me, a 21 year old University student whose savings insurance policy had just matured. My mother had bought it about a decade or so before for me and my siblings. The maturity is no princely sum, just around B$10,000 but to someone who has never seen anything beyond a few hundreds in his account, you can imagine what my went through my mind. “Wow! I have money I could spend on ANYTHING!” I thought. Fortunately, I had enough common sense to not splurge it immediately.
Fast forward a few years when I was doing a Masters degree in London. Now, even with the Ministry of Education’s (MoE) scholarship, London is a very expensive place to live in. It didn’t help that I applied and got accepted to a student accommodation with all the trimmings: breakfast and dinner provided, ensuite bathroom, all bills included, fast internet, and most importantly: it was a hall for postgrads so I did not have to deal with all the undergrad rowdiness. So the accommodation price came to £680 and MoE scholarship allowance was £700. Ouch…
So naturally, I began tapping into my savings thinking I can earn all of it back once I’m back in Brunei and started working. I probably shouldn’t have spent on unnecessary things like a Tube pass and gym membership which I didn’t use so often.
Fun fact: I have not reached a B$10k “ready to spend money” in my account since I started working.
The future owes you NOTHING! What you “deserve” is not going to be served on any platter, silver or otherwise.
2. If only I could win a million dollars!
I used to fantasise of winning a £1,000,000 when I was doing my Masters; a thought that never crossed my mind before. “What would I do with it?” I would think to myself, “The exchange rate is 2.4 GPB to 1 BND so I could split it in half and have a million back home too!” From time to time I would try my luck and buy a scratch card for £5 and hope for the best. Needless to say, Lady Luck wasn’t with me for the 6th or 7th times I tried (Luckily, it never turned into a habit).
But I am also glad that I never won because it taught me an important thing; Money isn’t the answer to my problems. I might have been a poor student but having more of it wouldn’t have made it better for me now. It was naïve to think that just by having money drop from the sky, everything would be better! I would have spent on unnecessary purchases back then rather than trying to accumulate assets anyway!
We have probably read about people who win lotteries, end up splurging it and then were back to where they started months or years later. This result was because they did not change their behaviour towards money. They did things they normally would have done and at a greater scale so it is unsurprising that the end result was the same.
Without a sound financial education, even with having lots of money, you will end up being back at your starting point.
3. Money is not everything.
Now, this is a big U-turn from before! After University, I was job hunting while having this mindset. I was thinking that as long as I found a job I liked, money was no issue. Soon, this mentality manifested beyond its initial meaning. It became a way of thinking that money is not a necessity.
This was wrong because for many, money is everything. In our world and society, it is what allows us to buy food, pay rent and pay for utilities. Remove money from the equation and suddenly we are starving and homeless. Many financial writers such as T. Harv Eker and Robert Kiyosaki advocate the respect of money. If you do not respect it, why should you get more of it? This was me years back. Not knowing this little thing, I spent 2 years doing different jobs and earning no more than a couple of hundreds a month.
When I read more into financial education and learned more about my way of thinking, things turned around for the better. It could have been merely a coincidence but it seems all too convenient.
For many people, money is everything. Never think that it is an unimportant element which many in our society works to earn in order to make a living.
4. It will work out somehow.
This was a misplaced belief that everything will work out regardless of what I did. No job out of Uni? It’ll work out. Savings getting dry? It’ll work out. But unfortunately (for me) little was done because of this and therefore nothing much resulted at first. It’s probably obvious at this point that it’s pointless to wait for handouts. The welfare society in Brunei may have a little to do with it.
Without action there would not be any changes to where we are and where we’re going. I have learned that even a seemingly small action has the potential to change the results of the future. Little things like asking a question or making contact with a person could lead to a chain reaction and desirable results. Inaction causes us to become stagnant and never becoming better.
I still have this mentality but I try to inject objectivity into it, thus making it more calculated optimism than blind faith in the unknown. There are times when it comes as different forms: procrastination, lethargy or plain laziness. It’s a constant battle of wits; with myself.
Everyone has the potential to make a difference in their own futures but it all takes action on each individual’s part.
5. Must. Save. Every. Penny.
Once I started absorbing all the financial books I could, I started shaping what I thought was a good budgeting plan: don’t spend on anything unnecessary. Sounds good, right? But not if you took it to the extreme like I did. I started calculating everything I spent out of my pocket: petrol, groceries, eating out. While this made it easier to budget properly later, it certainly wasn’t as efficient as I thought it’d be at first.
For one, I concluded that leisurely things should be kept minimal and at a “go Dutch” basis; basically every man for himself when it comes to payment. You can imagine how my then-girlfriend felt about it. She had to suffer a short stint of this period (oops). Lack of doing fun things using my money started to take its toll. It was tiring enough with being calculative; add on the fact that any discussions about it turned into a heated battle with my lady friend made this very straining.
After a while, I realised the fine line between being frugal and, well, having no proper plan. Now, as long as I have budget remaining for the rest of the month, it’s anything goes. I’m sure the missus is more than happy with me being so much less drastic with money. And it’s certainly been more fun and less stressful.
There are better ways to save than to go to the absolute extremes of penny pinching. Plus those around you would likely appreciate life without enduring those extremes.
6. Must Invest in Everything!
All the reading gave me many ideas. They all tell the reader “It’s all possible! You can be a millionaire too! Just invest!” So, becoming excited, I started looking for these so called opportunities. I attended talks about mutual funds, visited roadshows about rental properties in London and Melbourne, looked into stock markets in the US and Singapore. All of these were excellent information but I lacked the most important aspect: the ability to do proper due diligence. One more problem I came across is that the minimum amount you have to put in for some is really high! Here I was, with less than a few thousand bucks to my name and they wanted 5-digit deposits!
Investing is a simple game, but hard to master. I have just begun to dig into the tip; there’s a vast amount of information available and we just have to know which ones are relevant. Fortunately for me, I did not jump into any types of investments no matter how eager I was to start. But now I feel like I’m lagging behind my plans through inaction and should really get on with it. It’s all about a balance of analysis and doing, with the right knowledge to back you up.
Jumping right into any investment and knowing nothing about it is the worst thing you could do with your money. Second worst is not doing anything at all.
7. Millionaire Bootcamps
Wouldn’t it be great if you could attend a training or course which will gear you to become a millionaire? I had an opportunity back in 2013 when I attended a free 3-day course held locally (haven’t heard of such a thing since).
So what happened during the 3 days?
It was a series of high intensity talks and exercises designed to pump up the crowd followed by hard selling their “elite courses” combo package “for this event only” for “only $8,000”. Yes, only $8,000; small change compared to the hundreds of thousands you can earn when you unlock your true potential! Over time, the speaker starts to wear you down through their motivational speeches, sharing experiences and other gimmicks they employed. And I got drawn to it, the prospect of being able to earn tens if not hundreds of times more was very enticing.
I put down $500 deposit so I could secure my spot, telling them I’ll withdraw the rest and pay the next day. At the end of the day I told my mother and girlfriend. Their reaction were super adverse and was something I had not expected. “They don’t know how good this opportunity is because they weren’t there!” I reasoned. But their negative reactions did convince me to not drop $8k (though I was bitter at the time). And I am glad they did as in hindsight, all I had was B$8,000 including savings and all would have been wiped out from the brainwashing. That and the fact that the organisers from Malaysia became unresponsive to queries after that made me feel I definitely dodged a bullet there. Double the win that I was able to get my deposit back.
No training or course is going to make you millions. If there were, there’d be more millionaires everywhere. Only you can make your millions.
Although I had a series of misconceptions about money and wrongly targeted mindsets, I was fortunate enough to dodge serious money problems. Hopefully, you are able to reflect on your current belief systems to see which resonates similarly with you and learn from my mistakes. Everyone makes mistakes; it’s a fact of life and you become better, stronger, wiser through it. Besides:
A person who never made a mistake never tried anything new.
– Albert Einstein