The One Thing "Almost Everyone" Gets Wrong About Money, Says a Financial Planner
I'll be the first to admit that personal finance isn't one of my strong suits—I've let my FOMO guide my spending and am admittedly a bit clueless when it comes to investing. Which is why I'm more than willing to glean insights from people like Lauren Lyons Cole, who has worked as a financial adviser in New York City for the past decade.
After reflecting on the past 10 years in the industry, she "realized almost everyone gets the same thing wrong about money," she writes for Business Insider. After working with everyone from social workers to lawyers to Wall Street bankers—whom she calls "some of the brightest people in this city"—she's realized that most people mistake belongings for wealth. "Stuff doesn't equal wealth. Money does. And it's not the same thing," she deadpans.
More specifically, she argues that Americans tend to define wealth by how much people spend rather than how much money they have. "We typically can't see our friends' bank accounts or retirement accounts," she adds. "But we can see the jewelry they wear or the vacations they take." Because of this mindset, she's reportedly seen teachers with bigger savings accounts than doctors who earn five times as much.
She cites a Schwab Modern Wealth Survey to substantiate her observation. When asked what makes someone wealthy, over half the American respondents chose an answer that measured wealth by spending, on both experiences and things, rather than the correct answer: having a lot of money. "At the end of the day, anyone has the capacity to build up a sizeable net worth," she concludes. "You don't have to earn a ton of money. It boils down to one simple—and not very flashy—truth: You have to have money in the bank. And to do that, you have to spend less than you earn."
Head over to Business Insider for more.