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Exposing the Origins of Financial Myths

By Garrett Gunderson

“A myth is a fixed way of looking at the world which cannot be destroyed because, looked at through the myth, all evidence supports that myth.” —Edward de Bono

If, as I claim in my book Killing Sacred Cows, much of what we’re taught about money is false, then why are these myths so prevalent, and where do they originate?

Most of the money myths we’re taught today originated during major economic or cultural developments (such as the Great Depression), are solidified by financial institutions that have a vested interest in maintaining the status quo, and are spread through the misguided advice of well-intentioned family members and friends.

We rarely think to question the financial concepts we believe in and follow. Seldom do we consider that these “tried-and-true” strategies might in fact be false.

We’re trained in our perceptions of money from a young age. Our parents pass along to us their own ideas about money. Even if their ideas are not explicitly stated, we absorb them through observation of our parents’ use of money.

If they were careless spenders, we will likely spend our money carelessly. If they were cautious and suspicious of others, we will hold tight to our money in like manner and miss opportunities to grow our wealth.

Or we will adopt the polar opposites of their behavior about money and get ourselves into entirely different trouble. Without even knowing the source of our feelings about money, we will behave in ways that perpetuate financial mismanagement through our lifetimes and those of our children.

The members of our families and communities contribute to our miseducation through their own buying habits, through employment and investment advice, and through other motivating behaviors.

Most people have good intentions, but their advice relies on the same myths they were taught or information that may be pertinent to their situations but does not relate to our own.

The myths we absorb from our parents and community are supported by society as a whole. Our culture offers “wisdom of the ages” in the form of clichés about money that we rarely question.

These clichés are often rooted in historical events that have little to do with our current economy or our personal financial situations. For example, the Great Depression resulted in hoarding and a scarcity mindset that permeated American culture and heavily influenced succeeding generations. And the post–World War II boom led to the belief that financial security came from tying oneself to a corporation.

These beliefs are perpetuated by institutions within our society because they support their goals or because the people within the institutions don’t know any better either.

“Nothing is more difficult than competing with a myth.” —Françoise Giroud

Financial services companies sell their products by promoting perspectives and methods with fancy names such as “The Miracle of Compounding Interest.”

These marketing messages have been used for so long that we have come to accept them as viable and trustworthy financial strategies.

But financial institutions have always practiced and continue to practice the very things that we are either told to avoid or are completely unaware of. The ideas they promote are good for them, but not necessarily good for us.

Conventional retirement planners are usually no more helpful in the quest for true financial freedom.

Not only do retirement planners receive their training from financial institutions, but they often work directly for these companies as well. Even if a retirement planner is knowledgeable in correct economic principles, he usually has an underlying incentive to sell suboptimal products.

This does not mean that financial institutions are inherently evil because they pursue their own interests. It does mean, however, that we must be aware that institutions are in business for a reason: to increase their revenues and their bottom line.

My goal is not to tell you to completely avoid financial institutions; it is simply to point out that they have their own distinct interests and those interests may not coincide with yours. The better we under- stand the agendas of financial institutions, the more wisely we can utilize their policies for our benefit.

Educational institutions aren’t effective at combating the myths that financial institutions propagate. American schools fail at educating students in correct principles of personal finance.

A very different approach to money management is taught to students in personal finance courses as opposed to those in corporate finance courses.

Personal finance directs learners to accumulate net worth, pay off debt, invest for the long term, and protect their possessions with term insurance.

The corporate finance course teaches velocity of money, cash flow, risk management, and permanent insurance strategies. These principles and methods are far superior to and less risky than the personal finance techniques. In fact, corporate finance strategies are intended to take advantage of the investment dollars tucked away by people using personal finance methods.

What isn’t taught to the average American is that corporate finance strategies can be employed on a personal level and used to achieve far greater wealth with equal or better security.

To combat the compounded influence of family, community, experts, education, and society—a daunting task—we must realize that popularity and the majority’s opinions don’t necessarily point to the truth.

In other words, fifty million people saying a dumb thing doesn’t make it any less dumb.

The herd mentality is destructive. Consider this question: If only a minority of people are wealthy, why do we follow what the majority of people do financially?

True principles of personal finance exist that can lead to prosperity for anyone in almost any circumstance. But succeeding with these principles requires the courage to step away from the crowd and to choose “the road not taken.”


Garrett Gunderson is an entrepreneur, financial coach, the founder of Freedom FastTrack, and the primary author of the New York Times bestseller Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity.

Garrett loves inspiring others to turn their potential into production. He has dedicated his life to living and teaching a unique concept known as Soul Purpose that reveals how anyone can live a more prosperous and rewarding life.

As a finance and business productivity coach, Garrett instructs both large and small groups of business owners and financial service professionals nationwide.

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