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This article was first published in the Divorce Magazine and are reprinted here with their full permission.

Money Myths

Money myths are global beliefs about all the wonderful, almost magical things that money can do for us. Though each of these myths contains some modicum of truth, taking them as gospel can prevent us from making rational decisions with our money. Here's how to identify and debunk some of the myths that may be causing problems in your financial and personal life.

By Olivia Mellan

Most North Americans believe in at least one money myth; many of us believe in a number of them. These beliefs can trigger intense emotions about money (anxiety, fear, obsession) and can even make it difficult for us to handle the simplest financial decisions and tasks. Here are the most common money myths:

  • Money = Happiness
  • Money = Freedom
  • Money = Love
  • Money = Self-Worth
  • Money = Power
  • Money = Security

What do we need to do about these money myths? First we must identify the myths that are affecting us personally. Next we must spend some time debunking the money myths, one by one. Only then will we be free to use money and make decisions about our money in a way that enhances our life rather than constrains it.

Money = Happiness

Money equals happiness is one of the most prevalent myths in our culture. We are raised on stories about people who worked hard, struck it rich and lived happily ever after. Such individuals as Horatio Alger, Andrew Carnegie, Oprah Winfrey, Ted Turner, and Jane Fonda serve as the quintessential models of success. But do we really know enough about these men and women to know if they are truly happy and whether money is the primary factor in their supposed happiness?

Even our old tired jokes reflect this pervasive belief that money equals happiness. Consider these common sayings: "Being rich isn't everything, but it sure beats whatever is in second place!" "I've been rich and I've been poor, and rich is better."

Of course, being poor or financially stressed definitely does affect our happiness. But it is not the prime determinant of our happiness and satisfaction in life, and we would do well to remember. Otherwise, we will be driven to amass large sums of money in a way that may well impinge on or even destroy the happiness we hoped money would create.

Do you believe that Money = Happiness?

If you want to know for sure whether you believe in the money-is-happiness myth, ask yourself the following questions:

  • Do you tend to believe that money leads to happiness, fulfillment, contentment?
  • Do you catch yourself thinking, "If only I had (made) a little more money (or a lot more money), everything would be great"?
  • Do you envy others who make more money than you do, or who have more money or more things, assuming that they must be happier than you are because of their greater financial ease?
  • When you encounter someone who you know is not very wealthy, do you assume that the person couldn't really be happy?
  • Would having to take a small decrease in your own or your partner's income make you feel very upset?

If you answered yes to at least three of these five questions, you're influenced by the money-equals-happiness myth.

Debunking Money = Happiness

To begin to challenge this belief, I recommend that you think about, write down, or tape-record the answers to the following three questions:

  • What two activities do you love to do that make you very happy?
  • How much does it cost to do these activities?
  • Are these activities best done alone or with others?

I have done this exercise with many diverse groups through the years. Invariably, the majority of people in each group will choose at least one activity that costs very little money or no money at all. (For most people, making love is on the free list!) And most people find that at least one of their activities, if not both, is best done with another person. So maybe it is social connections that equals happiness. Participants in my workshops are pleasantly surprised when they realize that many of the things they love in their lives cost nothing or next to nothing. If your results are similar, let this awareness remind you that much of your happiness has very little to do with money at all.

Here's another useful exercise to try:

  • For one week or one month, keep track of what you spend your money on.
  • On a scale of 1 to 10, rate the fulfillment that each expenditure brings you.

This exercise can be a real eye-opener, for it shows you many ways in which you use your money that don't add one iota to your happiness and fulfillment. If, after reading and trying these exercises, you still believe that "if only I had more money, I'd really be happy," take a little time to search for and note examples that run counter to the money-equals-happiness myth. Think about people you know personally, or have read or heard about, who:

  • Don't have a lot of money but are very happy.
  • Have a lot of money and are not happy.

When I was a guest on a TV talk show in 1991, I met Dennis, an earnest man who had just won the lottery. He shared with me his feelings of unhappiness and anxiety after this supposedly wonderful event brought him a large amount of money. Dennis had had dozens of business proposals -- and even a few marriage proposals from women he didn't know! He had become mistrustful: how could he possibly distinguish between those who were reacting to his money and those who were responding to him as an individual? This windfall made Dennis's life a living hell for a while. And even though he was learning how to deal with his situation, he would never say that for him, money equaled happiness. In fact, many other lottery winners also report that the vast change in their financial status has had a very destabilizing effect on their lives and has created more problems than it solved.

Here is a final assignment for those of you who feel affected or controlled by this money myth:

  • Every day for a week, spend time on activities, old or new, that cost little or nothing and that bring you happiness.
  • Notice and record your feelings about each of these activities. Doing this assignment will help you realize that there is much in your life (or there could be) that costs little and makes you happy.

You may also be heartened by the testimony of readers of a magazine called The Sun, who wrote in on the subject of wealth. It was startling to see how many of the letters did not equate real wealth, and the feeling of abundance that comes from deep fulfillment, with financial wealth. Many of their letters said, in essence, "When I think back on the past 20 years, I realize that my husband [or my wife] and I were happiest when we were making less money. Our lives were simpler; we were more creative about doing things we wanted to do; we were less workaholic; and we had more time and energy to enjoy life and each other. That seemed like true wealth to us."

In these recessionary times, with so much real financial uncertainty in the air, freeing yourself from the belief that money equals happiness can enable you to better roll with the punches. If you are denied a cost-of-living increase or a raise because of tough financial times at your job, you will tend to feel less depressed and deprived. Whatever the financial ups and downs, you'll stand a much better chance of getting enjoyment out of life.

Money = Love

Every time we turn on our TV, we are bombarded with commercials that try to link money with love in our minds. They tell us that if we would just buy this flower-fresh deodorant, or that new and improved shampoo, or the latest model of that snazzy sports car, we'd have all the love and happiness we could want. Advertisements in newspapers and magazines are sending us the same messages. This dangerous cultural conditioning, and the "keeping up with the Joneses" mentality that fuels it, contributes to the epidemic of compulsive spending in this country. Many of us believe not only that money equals love but that money can substitute for a lack of love.

Do you believe that Money = Love?

To find out if you are among the many who believe in the myth that money equals love, answer the following questions:

  • When you feel lonely or depressed, do you buy yourself something to cheer yourself up?
  • Do you tend to buy yourself something as a way of celebrating or rewarding yourself for a job well done?
  • Do you tend to shop impulsively or compulsively?
  • Do you buy things for yourself or others regardless of whether you have enough money to pay for these purchases?
  • When you feel deprived or unloved, does buying yourself something seem like the first recourse?

If you answered yes to three or more of these questions, then money equals love for you, at least to some extent.

Debunking Money = Love

If you subscribe to this myth in your actions and attitudes, you may need to spend some time thinking about people you know personally who:

  • Don't have a lot of money but have a lot of love in their life.
  • Have a lot of money but seem starved for love.

The next step in debunking this myth is to practice new ways of nurturing yourself that don't cost much money (or perhaps cost no money at all). If you tend to reward yourself by shopping (impulsively or compulsively), think of alternate activities that would serve the same purpose. For example, you might take a hot bath or have a long talk with your best friend. You could attend a religious service, listen to music, read a book, meditate, or go to a museum. The possibilities are endless!

If you feel that the urge to shop comes over you like a tidal wave, and that you can't say no to it, you may well have a spending addiction. There's no need to be ashamed about this problem. You are far from alone. Its source is usually a combination of early childhood deprivation (on an emotional, physical, or material level) as well as the social alienation that comes from being in a culture where there is a lack of community, a feeling of spiritual emptiness, and a craving to feel whole on some level. The only problem with the solution of using money as a substitute for love is that it doesn't work. It is like a Band-Aid on a festering wound, providing temporary relief from the feelings of loneliness, pain, or emptiness, but never actually healing the wound. In fact, these "quick fixes" erode self-esteem over time and create a self-perpetuating downward spiral that can often lead to more severe emotional as well as financial crises.

Money = Power

The myth that money equals power is deeply entrenched in the media. Advertisements, especially car ads, are adept at communicating this "truth." TV programs and movies show us rich men who control the world in exciting ways. They also demonstrate the flip-side of this myth: that money equals power in an evil sense, and that these rich people will end up destroying their lives or the lives of others with all their money.

As I said earlier, some truth is contained in every money myth. When we look around us, we see not just fictional but real-life examples of wealthy people who use their money and the status that may accompany it to wield power over others. It's been said that for many women, power is a great aphrodisiac; and wealthy men have often had an advantage in seducing and coupling with women. Many of us have had personal experience with superiors at work, who make more money and have more power than we do, using their authority over us in ways that constrain us and make us feel powerless. Having money can lead to more choices (of educational and job training, for example) and can enable us to travel far and wide and to procure many of the things we want. It can buy good health care. And of course, all of these things are a kind of power.

But debunking the myth that money equals power can lead to new, creative life choices for us and our intimates.

Do you believe that Money = Power?

To see if you believe in this money myth, ask yourself which of the following statements seem true to you:

  • The most powerful people in the world are rich.
  • If I had more money, I'd definitely be more powerful.
  • When people lose money, they lose power.
  • I need a lot of money to accomplish my goals and feel in control of my life.
  • Less money means less power to live my life as I choose.

If you agree with three or more of these statements, the money-equals-power myth seems at least partially true to you.

Debunking Money = Power

If you think that money equals power in a positive sense (power to get what you want and need in life), then think about, write down, or tape-record your impressions of a few people you know personally, or have read or heard about, who:

  • Don't have a lot of money but seem quite powerful to you.
  • Have a lot of money but lack personal power.

Now consider:

  • What factors (besides money) are necessary in attaining personal power (power to build a fulfilling life, accomplish life goals, maintain fulfilling relationships, etc.)?
  • On a scale of 1 to 10, how would you rate the importance of money and these other factors in attaining these desired goals?

When I think of people who are not wealthy and have tremendous personal power, the first examples who come to mind are famous people who have changed the world in some sense. (For me, that is the height of personal power.) Mother Teresa, who refused large donations of money and sought personal help and support, nurtured thousands of abandoned children; and Ralph Nader, who is famous for following a spartan lifestyle, has been working to make our society a better place for consumers.

  • If you believe, on the other hand, that money equals power in a negative sense (power to corrupt and destroy lives), then you need to find examples of people you know personally, or have read or heard about, who:
    • Have a lot of money and use it not to wield negative power but to enhance their lives and the lives of others.
    • Don't have a lot of money but wield power in a negative way.

When I think about people who have a lot of money and use it well, I think about entertainers who sponsor benefits like Live Aid, Comic Relief, and Farm Aid; Elizabeth Taylor and her work raising money to combat AIDS; and families such as the MacArthurs, who give grants to reward geniuses for their creative endeavors and to allow them to pursue their work less encumbered by financial constraints. I also think of Ben Cohen (of Ben and Jerry's ice cream), who organizes his business and uses his money to promote world peace, shared profit in business, and more egalitarian models of leadership. There are numerous other examples of people who use their wealth to enhance the lives of others.

But remember that money cannot buy personal fulfillment, and the power that comes from being truly in harmony with your own values and living out a life that you love and respect. Money cannot buy spiritual fulfillment; it cannot buy friendship. When we look around and see examples of those who thought they had tremendous financial power but then lost it, people like Leona Helmsley and Ivan Boesky, we realize that the heady wine of power through money may not ultimately be as satisfying as many of us think. It's not uncommon for people making huge amounts of money to be workaholics who sacrifice health and personal relationships for the power they think money will bring. So, in the end, what constitutes true power for us? Is it power over others, or control over our own lives? And aren't there many ways to achieve control over our own lives that are not determined by money?

Let's apply the idea of achieving personal power to your own life.

  • In what areas of your life would you want to feel personally powerful?
  • Is money involved in the attainment of all these goals, some of these goals, or none of these goals? If so, how much money?
  • What adjectives would best describe how you would feel about achieving personal power in your own life?

Money = Freedom

Money equals freedom is a myth that many of us hold dear. As long as we secretly, or not so secretly, cling to this one, we never have to ask ourselves what we really want to do with our lives, and what might be preventing us from doing it. We can comfortably tell ourselves, "If only I had more money, I'd be free to paint; write that novel; travel to Europe; change professions ... to do what I really want to do or what I was meant to do." And, of course, since doing some of the things we want to do in fact does cost money, the partial truth of this myth makes it convenient for us to hold on to it, instead of challenging the notion and perhaps achieving real freedom.

Do you believe that Money = Freedom?

If you think you may be controlled by this myth, determine whether you agree with the following statements:

  • Having more money would enable me to do what I really want to do in my life.
  • It is mainly money that is preventing me from doing what I really want to do.
  • Wealthy people are truly freer to create the kind of life they want.
  • The key to real freedom is to have enough money.
  • I often think wistfully about all the things I could do, and all the freedom I would have, if only I had more money.

If you answered "true" to three or more of these statements, money equals freedom to you, at least to some degree.

Debunking Money = Freedom

If you believe that money equals freedom, here's an exercise you can do to begin challenging this notion. Identify and describe, in as much detail as possible, a few people you know personally, or have read or heard about, who:

  • Don't have a lot of money but seem very free to you.
  • Have a lot of money but don't seem to be free at all.

Figuring out what constitutes true freedom is the work of a lifetime. But I don't believe that money is the major determinant -- as long as we have enough to meet our basic needs and wants, for food, shelter, clothing, and for some pleasures of life that do cost money.

Speaking of pleasures, let's focus for a moment on travel. Recently, a wise old friend of mine named Richard made some astute observations on the connection between money and the freedom to travel. He described the experiences of friends of his who had gone to Europe on a shoestring many years ago. They hitchhiked around, stayed in small villages as guests in the homes of people they met while traveling. They really got a sense of what each culture was like. He contrasted them to people he knew who were rich and wanted to go to Europe but who felt they had to stay home and make sure their money was growing. He also mentioned those who went to foreign countries and stayed in ritzy American-style hotels, never getting out and seeing the people and experiencing these cultures. To him, that didn't seem like freedom at all.

Of course, freedom is a tricky notion. We are not talking about freedom to act out all our impulses, however destructive. No amount of wealth makes this freedom permissible. We are talking about the freedom to do all that we wish to do, and to be all that we wish to be.

Let's now turn to an exercise that you might find useful in debunking the myth that money equals freedom:

  • For one week or one month, keep track of what you spend your money on.
  • On a scale of 1 to 10, rate how much pleasure each expenditure brings you.
  • Note how much time you have to spend working to make the money to pay for these expenditures.

This process can be revealing, for it may point up ways that you are giving up your freedom and free time to purchase things you do not value or enjoy very much.

If you are willing to take a positive step in moving closer to your dreams and goals, think about the following:

  • What could you do in the next six months that would give you more freedom without requiring a major change in your financial situation?
  • What has prevented you from doing this thus far? Is it really money or something else?
  • How could you do this, or take a step towards doing it, in the next week, couple of weeks, or month?

If you do take this action, remember to reward yourself and to monitor your thoughts and feelings (in writing, on tape, or at least in your mind) about moving in the direction of real freedom.

Money = Self-Worth

The myth of money equals self-worth comes up for many men and women when they're thinking about how much they're paid for the work they do. As a self-employed psychotherapist, I used to say to myself, "I'm trying to set a fee for my services, but how much am I worth?" My therapist colleagues in private practice are often heard asking themselves and one another the same question. Now it makes me cringe a little to realize how quickly we all equated our self-worth with the amount of money we charged for our work. Perhaps a more appropriate question to ask, if you are self-employed, is one of the following: "What's the going rate?" "What's a fair amount to charge?" "How much do I need to make?" "How much feels right for me to charge?" or even "How much can I tolerate charging without feeling guilty or having an anxiety attack?"

Men are, of course, socialized in our culture to equate self-worth with success in work; women historically tend to rate themselves more according to success in intimate relationships. But as increasing numbers of women have entered the workforce in higher-level positions, they are becoming more and more susceptible to measuring their self-worth by the amount of money they make. So this equation of money with self-worth has become a serious problem for both sexes.

Do you believe that Money = Self-Worth?

If you think that you subscribe to this myth, ask yourself the following questions:

  • Do you feel a lot better about yourself when you're making more money?
  • Does the income of people close to you affect how much you respect them?
  • Do you fear that people would look down on you if you underwent a salary cut, for any reason?
  • Would being unemployed for a short period make you feel bad about yourself?
  • Do you lose some respect for people if you find out that they are making much less money than you thought they were?

If you answered yes to three or more questions, then to some degree you believe that money equals self-worth.

Debunking Money = Self-Worth

If you believe that your self-worth is tied to money, you need to look for examples that run counter to this powerful myth. Identify and describe, in as much detail as possible, a few people you know personally, or have read or heard about, who:

  • Don't have a lot of money but, in your opinion, have an abundance of self-esteem.
  • Have a lot of money but seem to have very little sense of self-worth.

The next exercise for debunking this myth is as follows:

  • Imagine something you could be doing with your life that wouldn't involve a lot of money but that would enhance your self-esteem or sense of self-worth.
  • Write down a description of this activity or situation.

Bear in mind that for the time-being you're under no pressure to take action; just imagine this scenario. At some future time, you may want to take a concrete step towards your goal.

If you lose your job suddenly, it's in your best interest to discard the belief that money equals self-worth as quickly as possible. Tina's story will illustrate what I mean by this statement. Recently, she came to me for therapy after receiving notice that she was being laid off at work. Though she admitted that the job she held had been unsatisfying for the last two years, and that in her heart she knew it was time to move on, she was reeling from the shock of being laid off with two weeks' notice. She was doubting her abilities and feeling shaken in her self-esteem because her salary was removed abruptly and she was soon to be out of work. It took only a few sessions to help Tina disconnect her feelings of self-worth from this work trauma and start to reconnect with her real sense of energy and passion in work. Within a month, she was volunteering in a field she loved but had not had time to pursue. Within three months, she had been offered a position in that new, more creative arena. The beginning salary was slightly lower than that in her old job, but she felt no decrease in self-esteem. Quite the contrary: working in an area she loved increased her confidence and zest for life.

Since none of us had perfect parents, we go through life with holes in our psyches. We try to fill in the gaps through our jobs (as in Tina's case), our other achievements, our possessions, and, for some of us, by trying to make more and more money. But I believe the only way of truly enhancing our self-esteem and self-worth is to keep on working to fulfill more and more of our potential: to strive to be the best we can be in the areas of our life in which we feel passion and commitment. If we attach self-worth to the vagaries of the financial marketplace, we will be standing on shaky ground indeed. And the temporary admiration of others at our financial success can never fill us up over time in the same way that our own self-love and self-respect will.

Money = Security

Money equals security is a very prevalent myth in our society, even though we tend to be a society of spenders rather than savers. Who among us does not believe, to a certain extent, that money is one of the main things that will provide us with some security, especially in our old age? This money myth, like all the others, contains some kernel of truth. We do need enough financial security to make us feel at ease about our ability to take care of ourselves and our loved ones. But believing this money myth and investing too much emotional energy in it can be potentially destructive and even paralyzing.

Take David, for example. His uncle had gone bankrupt as a result of a bad business deal and had attempted suicide. This financial tragedy had such a profound effect on David's dad that he worried all the time about not having enough money and lectured his children about the evils of frivolous spending. David grew up to be a lawyer who worked day and night to make money. He had an intense drive to save more and more money for his retirement years so he and his wife could live comfortably and still provide their three kids with a substantial inheritance. David was so worried about not having enough money that he never wanted to take even two weeks off at a time for vacations. He missed his daughter's sixth-grade concert and his son's eighth-grade play because he had to work both nights "to ensure his family's security," as he put it. He attacked his wife for buying a new living room couch when the old one was threadbare, calling this purchase an "unnecessary luxury." At the age of 48, he had the first of two heart attacks. With all this money, David was not secure. And if he died early, his children, the youngest of whom was six when the first heart attack struck, would not feel very secure and safe, even with more than enough money.

Do you believe that Money = Security?

To see whether this money myth has a grip on you, ask yourself the following questions:

  • When you think about not having a lot of money saved for the future, do you feel very uneasy and insecure?
  • Do you judge people who spend a lot of money for present pleasures and short-term goals as being unwise and shortsighted?
  • When you think about being secure in your old age, is having enough money the first thing (or the main thing) that comes to mind?
  • Does putting money away in savings or in other "safe" investments give you a feeling of inner peace and security more than any other action does?
  • If you have fears about your old age, does thinking about having more than enough money during that period comfort you and allay most of your fears? If you answered yes to three or more of these questions, you probably believe that money equals security.

Debunking Money = Security

The trick in debunking this myth is to find a few examples that serve to contradict it. So I suggest that you identify and describe, in as much detail as possible, some elderly people you know who:

  • Don't have a lot of money but seem very secure to you.
  • Have a lot of money but don't seem at all secure.

What do you think is the difference between these people? What does one have that the other doesn't that leads to more real security?

My friend Michael Phillips, author of The Seven Laws of Money and other books, helped debunk this myth for me personally. He once said to me that when he looked around at the elderly people he knew and tried to determine who seemed truly secure, he found that money was not the determining factor. Of course, he acknowledged, elderly people do need enough money for the basic necessities of life and for some pleasures and luxuries as well. But what distinguished these secure old people from the others was that they were not isolated; they were surrounded by a supportive network of friends of various ages. Goods and services were naturally exchanged in the course of their lives. Their friends were glad to take them grocery shopping or to shop for them; to accompany them to the movies or to invite them to dinner. So the prime ingredient in ensuring one's security in old age is social connectedness and lack of isolation, not money.

Helen serves as an excellent example of what happens when an elderly person lives with wealth but in isolation. Although she resided in a luxurious retirement community in Florida, Helen disliked people and preferred to sit at home all day watching TV and smoking cigarettes. But sometimes she ruefully observed that because she had no friends, she had to hire people to take her grocery shopping and to help her with other chores, and she would be completely on her own in a medical emergency. So even with all her money, Helen did not feel secure. When she was taken ill with a slow, debilitating form of cancer, she began to open up to people for the first time in years. She found loving help and support, and when she died, she was not alone and finally seemed at peace.

Granted, we do need to save money for our retirement and/or our later years of life. But if we understand that money is not security, we'll lose some of our general anxiety about whether we're squirreling away enough of it. Instead, we'll be able to redirect some of this energy towards developing more satisfying and lasting personal contacts and friendships.

Assessing all the Money Myths in your Life

You are now ready to take a collective look at all the money myths that have had an impact on your life. Consider:

  • What are your most prevalent money myths?
  • How have they been influencing your life?
  • How have they affected your love relationships and your relationships in general?
  • How would you like to modify these beliefs and the attitudes and behaviors that stem from them?
  • What can you do, or what do you need to think about or tell yourself, to continue debunking the myths that prevent you from making rational decisions about your money?

Money does not equal happiness, love, power, freedom, self-worth, or security. Money equals dollars and cents, and is merely a tool to facilitate your attaining certain goals and having certain things. If you remember this, you won't be encumbered by anxiety, guilt, fear, or shame about how to spend, save, or invest your money. Instead, you'll be able to use your money, both alone and in relationships, in a rational way that satisfies your real needs and wants, and that reflects your real values.

This article has been edited and excerpted from Money Harmony: Resolving Money Conflicts in Your Life and Relationships by Olivia Mellan (Walker & Company, $19.95). A psychotherapist and consultant in the field of money conflict resolution, Mellan shows you how your hidden, intense thoughts and feelings about money may be preventing you from dealing with it effectively -- and causing major stress in your life and relationships. This excellent book offers innovative exercises, dialogues, and other communication techniques to help you make positive changes in how you think about and deal with money, and to communicate more productively with your ex about money matters. Available at better bookstores across North America, such as www.amazon.com or www.indigo.ca.

Article appears courtesy of Divorce Magazine.




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