Overview
Many of us hold beliefs about money that were taught in school or society. These beliefs can actually stop us from earning more and becoming financially free. This guide will help you identify and replace four common, unhelpful money beliefs with more powerful ones. By understanding how money truly works and shifting your mindset, you can significantly increase your earning potential and move closer to financial freedom.
Prerequisites
- An open mind to challenge your current beliefs about money.
- Willingness to apply new concepts to your financial life.
Step 1: Rethink What Makes You Money
School often teaches us that a job is the primary way to make money. We’re encouraged to get good grades to land a secure, well-paying job. However, this misses the bigger picture of how money is actually made.
The real equation for money is: Money = Value Created × Value Captured (as a percentage).
Think of money as an exchange of value. To make money, you must create value for others. Value is created when you solve someone’s problem, ease their pain, or give them something they want. People are willing to pay for these things because they see them as valuable.
Consider a salesperson who brings in $200,000 for their company. They’ve created $200,000 in value. If they receive a 10% commission, they capture $20,000. This is the money they make.
Tip: A job is one way to create and capture value, but it’s not the only way. Running your own business or freelancing allows you to capture a potentially larger percentage of the value you create. This is because you have more control over your pricing and operations, even after accounting for business expenses.
Action: Start thinking of money not just as a result of a job, but as a result of the value you create and the percentage of that value you capture. Explore ways to create and capture more value outside of a traditional job, such as freelancing, starting a small business, or creating digital products.
Step 2: See Sales as Service, Not Sleaze
Many people have a negative view of sales, often picturing pushy or dishonest salespeople. This belief, often learned from media or overheard comments, makes it hard to earn money because sales are essential for making money.
The truth is, most sales are a win-win situation. When you buy a coffee, you get a drink you enjoy, and the coffee shop owner gets paid for their product and service. Both parties benefit.
Action: Replace the belief ‘Sales are sleazy’ with ‘Sales are service’. When you offer a product or service, you are providing value. You are making an offer, not forcing someone to buy. If they choose to buy, they likely see value in what you offer.
Expert Note: If you feel uncomfortable making offers or talking about money, it might stem from childhood ‘money scripts’—unconscious beliefs about money. Recognizing these beliefs is the first step to overcoming them. Successful people generally don’t judge others for making offers; they understand that offering value is how wealth is built.
Step 3: Embrace Self-Learning for Skills
School often teaches that skills are learned through formal training like university degrees or specific courses. While formal education has its place, it’s not the only way—or even the most effective way in today’s world—to learn valuable skills.
The internet has made self-learning incredibly powerful. You can learn almost any skill by using online resources like YouTube tutorials, online courses, books, and podcasts. This is often called ‘self-earning’.
Example: Even in demanding fields like medicine, where formal training is essential for licensing, students often supplement their learning with free YouTube videos that explain complex concepts or demonstrate practical skills. They watch, practice on friends, and refer back to the videos.
Action: Shift your mindset from ‘skills require formal training’ to ‘skills are learned through self-effort’. Identify skills that can help you create more value (e.g., marketing, coding, writing, sales). Then, actively seek out resources to teach yourself these skills in your own time.
Warning: While most skills can be self-taught, highly specialized professions like neurosurgery still require extensive formal training and hands-on experience under supervision. Focus on skills that are accessible through modern learning methods.
Step 4: Understand Business and Investing Aren’t Inherently Risky
Many people believe starting a business or investing money is extremely risky. This fear often comes from stories of people losing everything. However, the level of risk depends heavily on how you approach these activities.
Investing: Randomly picking one stock based on a tip is risky. However, investing in a diversified index fund, which spreads your money across many companies, has historically been a relatively safe way to grow wealth over the long term. The key is to invest for the long haul and not panic during market dips.
Starting a Business: Betting your entire savings on a single, unproven idea can be risky. But building a business doesn’t have to be that way. You can start with service-based businesses that require little initial investment, or validate your idea by talking to potential customers before investing significant money.
Expert Note: Some argue that having a stable job can actually be riskier than starting a business. With a job, your financial security depends on external factors like company performance, management decisions, and the economy, which are largely out of your control. Starting your own venture, done wisely, can offer more control.
Action: Reframe your view of business and investing. Learn about sensible, diversified investment strategies like index funds. When considering a business, focus on validating your ideas and starting small. Recognize that calculated risks, based on knowledge and planning, are different from reckless gambles.
Conclusion
By challenging and changing these four core beliefs—that jobs are the only way to make money, that sales are sleazy, that skills require formal training, and that business/investing are overly risky—you can unlock your potential to earn more and achieve financial freedom. Embrace value creation, see sales as service, commit to self-learning, and approach business and investing with informed strategy.
Source: The psychology of making money (YouTube)
