Eight Personal Finance Truths for Your Annoying Facebook Friends

Like a lot of people, I use Facebook primarily as a tool to keep up with the comings and goings of distant friends all in one convenient place. I also use it to participate in a few closed special interest groups and community-oriented groups.

One of the biggest frustrations that I find when using Facebook is when people post shared links and images depicting ideas that are easily disproven. You can go to sites like Snopes.com and find detailed explanations and references for why many of those things are false.

For me personally, the ones that really get my goat are the personal finance related ones. People will post things about how they need “money luck” or how a particular successful person doesn’t deserve their wealth or how the rich are completely wasteful.

I know, from my own experience and from the enormous amount of research that I’ve done in writing things for The Simple Dollar, that these things are just completely false. I’m often tempted to dive into those discussions and leave a comment in response, too, but instead I usually just hold my tongue.

Not today.

This post is dedicated to those shared money ideas on Facebook, the ones that claim that luck is the only way to build wealth, that people who have wealth aren’t worthy of having it, and how rich people are somehow simply “different.” All of it is junk, and here’s why, spelled out in eight simple truths that everyone should know.

Truth #1: Personal Finance Success Isn’t About Luck, It’s About Choices

Bill Gates could watch all of his money evaporate pretty quickly if he made a bunch of dumb choices. He doesn’t do that. That’s how he retains his wealth.

The same is true for most people who are financially successful. Usually, they built their money because of a lot of hard choices. Yes, there are occasions where luck played a role, but it’s rare. However, they have to make good choices to retain that money.

Take basketball player Eddy Curry, for instance. He had a $60 million contract with the New York Knicks to play basketball, with endorsement deals on top of that. What happened? He went broke as the result of a lot of bad choices.

Good choices build personal finance success. Bad choices destroy it. Luck actually has very little to do with it over the long haul.

Yes, some people will get some bad luck sometimes, but good choices will, over time, overcome that luck. Yes, some people will get some good luck sometimes, but bad choices, over time, will destroy that luck.

It is your choices that matter.

Choices like whether or not to spend $5 at the convenience store or the coffee shop.

Choices like whether to have a huge apartment or a tiny one.

Choices like where you buy your clothes and where you buy your household supplies and where you buy your food.

Choices like whether you spend your free time studying or building a small business, or whether you spend that time watching the latest episode of BoJack Horseman.

Choices like whether you spend downtime at work improving yourself and building strong professional networks and developing skills, or whether you spend that time checking sales on Amazon or playing fantasy football.

Those choices come at us constantly. The people who succeed are the people who make the better choices more often than the average person. Yes, luck comes along sometimes, but it’s that nonstop flood of choices that really makes the difference.

Choices matter, always. Luck? It just comes and goes.

Truth #2: The Richest People You Actually Know Are Nothing Like the Rich People in the Movies or on the ‘News’

We’ve all seen movies where wealthy people own these comically huge mansions. We’ve also seen television shows where people with stupid amounts of money do unbelievably stupid things.

It’s easy to conclude from those kinds of shows that this is how rich people act. They’re stupid and wasteful and live in ridiculous opulence.

Guess what? The people you see acting like that are generally the exception to the rule.

The book “The Millionaire Next Door” by Thomas Stanley and William Danko did a very in-depth study of people who were millionaires – those having a net worth of $1 million or more. The survey found that most of those people actually lived well below their means.

In fact, most millionaires are actually quiet and seemingly ordinary members of local communities. They don’t drive flashy cars and live in mansions. That kind of behavior mostly comes from people who are in the very, very, very top tier of wealth in the world (and even then it’s fairly rare), by people who are heading towards bankruptcy by making the “bad choices” described above, or by people who use that kind of spending as a self-marketing tool (such as a reality TV star who wants to portray that image).

You probably know a millionaire or two and don’t even realize it. How is that possible? It’s likely that said millionaire is really quiet about their wealth and just wants to be an ordinary part of their community. They worked hard to earn that money and for them it’s merely a security cushion for the rather ordinary life they want to live.

Being rich doesn’t mean that you act differently than anyone else. Outrageous and wasteful behavior has little to do with a person’s wealth.

Truth #3: The People Who Achieve Exceptional Things Have Usually Sacrificed Exceptionally to Get There and You Rarely See That Sacrifice from the Outside

The person you see playing a sport on television has usually put in countless hours of practice. Often, they played for many years on a level where they didn’t make a dime and had to live a pretty cheap existence to get there. They’re often carrying the burden of a financially destitute family on their backs that made their path even more challenging. That person had to sacrifice a lot to get where they’re at.

The same is true of virtually everyone who has achieved anything exceptional. On the surface, you might just see someone playing a sport or someone being a “vacuous” celebrity or someone just giving a speech. What you don’t see is the huge amount of preparation and planning and sacrifice that it took for most of them to achieve that. How many fun events they had to skip. How many other life choices they had to miss out on. How much hard work they had to put in, even if it doesn’t seem like it.

Take even the most vacuous “reality” “celebrity” you can think of. Behind the scenes, that person spends a ton of time filming and a ton of time maintaining a social media and professional media presence. They’re essentially required to keep themselves in tip-top physical shape. Almost all of them are constantly seeking out opportunities to leverage whatever fame they have. Almost all of them take acting classes and essentially prepare for their reality show as a “show.” Most of them are basically executing a business plan and many of them have studied business and marketing as well. There is a ton of work going on behind the scenes there, even if the image you see is of someone who doesn’t seem to be doing anything at all.

Virtually anyone who has ever built a name for themselves in any field and sustained that for more than a day or two has done so on the back of a ton of hard work, a ton of self-sacrifice, and a ton of planning.

You don’t get to an exceptional place without putting in a ton of work. Period.

Truth #4: There Is No Magic ‘Super Secret’ for Money Success. Anyone Telling You That Wants to Sell You a Product and Run Away With Your Money.

No one knows how to beat Wall Street. No one knows how to magically make $9,540 a month while working from home without a strong business plan and work ethic. No one knows the money secrets “they” don’t want you to know about.

It’s all a scam. There are no magic shortcuts to wealth. There is no magic wand you can wave to cause money to start flowing into your pockets.

Anyone who is trying to tell you otherwise is, in the end, selling something that won’t work – or will only work under exceptional circumstances.

There is no magic secret to wealth. It doesn’t exist. The only route to wealth is through making good choices consistently and by consistently spending less than you earn. There’s no other route.

Your horoscope is not going to make you wealthy. Sharing a Facebook image is not going to make you wealthy. Someone’s secret for stay at home income is not going to make you wealthy. Those things aren’t even going to help you pay your bills this month.

Truth #5: You’re Not Going to Make a Ton of Money Selling Stuff to Your Friends. You’re Just Going to Irritate Your Friends.

No, I am not going to buy your Advocare stuff.

No, I am not going to buy your Avon stuff.

No, I am not going to buy your Scentsy stuff.

No, I am not going to buy your Pampered Chef stuff.

Do I really need to continue?

Here’s the thing. Those companies sell stuff that no one really needs. They’re all non-essential things. Furthermore, most of those companies sell mostly stuff that people don’t really want.

When people buy stuff from those kinds of businesses, their thought process goes like this:

“Oh, no, this friend of mine is selling stuff from that company. I don’t want to hurt their feelings… so I’ll smile through the sales pitch. Oh, they want me to come to their party? Okay, I’ll do that. I guess. I really don’t want to go to this thing but… it is my friend, so I’ll go. I should probably buy something… I guess this is kind of like something I might buy elsewhere, but it is kind of expensive. I’ll buy that, I guess.”

Sure, you’re getting a sale, but you’re getting that sale largely because you’re tapping a friendship, not because they really want that product. You’re tapping their friendly obligation to you – or at least their sense of that obligation.

Stop. Just stop. Stop signing up for things where you have to sell to your friends. Stop investing your money into a bunch of products that you have to get rid of to make your money back. Stop making your friends feel guilty so that they feel inclined to buy some stuff that they don’t want. Stop pulling those friendship strings to make your friends spend money on stuff they don’t want.

I’ve managed to master the art of saying “no” to this stuff, but I’m actually rarely in the target audience here. Sarah is targeted more often than I am, and I’ve witnessed her own struggle in trying to balance friendship with buying something she really doesn’t want.

Friends don’t make friends buy their network marketing products.

Truth #6: The Stock Market Is Not a Scam

Before we get started, there are some methods of investing in the stock market that are really risky. If you buy just the stock in one company, unless that company is a very secure huge company, you’re probably making a risky choice, for example. Yes, there are some companies that are publicly traded that are on shaky ground. Yes, there are people working for those companies that do unethical stuff.

That doesn’t mean the stock market is a scam. It just means that you shouldn’t invest in scammy companies.

But how do you do that? How does Joe Average Investor know which company is scammy and which one isn’t?

The truth is, you don’t. That’s why, instead of investing in just one or two companies, you invest in everything at once. You put a little bit of money in most – if not all – publicly traded companies.

This is actually really, really easy to do. Just put all your money into a total stock market index fund. My preferred one is the Vanguard Total Stock Market Fund.

A total stock market index fund is really simple. They just buy a little bit of everything and because their investment strategy is so simple, they don’t charge much overhead. For you, that means you just buy shares in that total stock market fund, which means you effectively own slivers of shares of all of the publicly traded companies in the United States at once.

So, yeah, one company might be corrupt. Another one might go bankrupt. And you don’t really care.

Because you’re effectively betting on capitalism, not on individual companies. As long as people work hard, have good ideas, and figure out ways to become more efficient, you’re going to make money over the long run, because you’re not investing in one company, you’re investing in all the companies.

Sure, there might be some short-term burps – it happens – but over the long run, you’re going to make money.

The stock market isn’t a scam. It’s just easy to make a mistake and take on a lot of risk. The solution is to just do it smarter.

Truth #7: Gold Is Not a Great Investment

For me, this has been a constant over the last seven years. Buy gold! The dollar is going to collapse! You’ll only be safe if you own gold!

Here’s the truth, though: Gold is a volatile investment. That doesn’t mean the same thing as risky. What it means is that it has the capacity to go up rapidly in value and down rapidly in value. Over the very long term, though, it’s fairly stable and has been growing at a fairly steady rate that’s a little better than inflation.

It’s not a be-all-end-all solution to anything.

The reason that gold gets so much attention is twofold. First, there is a lot of mistrust of government out there. Much of that preys on misunderstandings of what the government does, particularly in terms of economics. If you give a two-sentence description of what the Federal Reserve does, for example, it’s easy to twist that in a way that feeds mistrust.

People mistrust the government. They mistrust things they don’t fully understand – and I’m not insulting people here, because no one fully understands all of the nuances of the Federal Reserve or of economics, not even Janet Yellen, Ben Bernanke, or Alan Greenspan.

Second, brokers, who make money whenever someone buys or sells gold, have the potential to make a lot of money if a lot of people are buying and selling gold. If they can convince people there’s a reason to buy gold, those brokers are going to make money.

So, put the two of them together. You have someone who makes money from people buying one kind of investment. You have other people who are sitting out there that deeply mistrust other types of investments. The answer is easy! If the first group convinces the second group that gold solves their problems, the first group is going to make money!

Don’t get me wrong, I’m not saying that it’s a waste of time and money to invest in gold. It has a place, particularly for people with a lot of money that want a very diverse portfolio.

My point is that, for the average Joe, it’s not a particularly worthwhile investment to throw small amounts into, especially when those small amounts are a significant portion of the wealth you have. It’s very volatile and you can easily get bitten if you need to sell it in the short term.

The reason that gold shows up so often as this great solution is because brokers want to sell fear and make money off of mistrust.

Truth #8: If You Keep Doing the Same Things You Always Do, You’re Going to Keep Getting the Results You Always Get

If you pay attention to some people’s postings over time, you can’t help but see the same cycles happen over and over again. They’ll post about how they’re fixing the drama in their life, then suddenly they’re in love again or fighting with someone again. They’ll post about getting in better shape, then post a picture of a gigantic meal two weeks later.

There’s also a money cycle, too, if you’re paying attention. Someone will post about their minor personal finance success – “Student loan finally paid off after nine years! Only four more to go!” – and then later they’ll follow it up with pictures of their new purchase or from their vacation destination.

The reason it took you nine years to pay off that loan – and the reason you still have four more to go – is because you buy this stuff. You go on expensive trips when a camping trip to a national park would be nearly as much fun and a tenth of the price.

Repeating the same choices will cause you to repeat the same problems.

Instead, try something different. Skip out on an expensive trip during your next vacation. Move into a smaller apartment instead of a bigger one (and get rid some of your excess stuff in the process). Don’t replace your car after three years.

What you’ll find is that your debts start to melt away. Suddenly, you can save for the future. Suddenly, you can take a career risk or take on a new challenge.

If you keep doing the same things you always do, you’re going to keep getting the same results you always get.

However, if you start trying to do things differently, you’re going to change your results, too.

Final Thoughts

Just because you see people making financial mistakes on Facebook doesn’t mean you have to. Just because you see people sharing poor financial ideas on Facebook doesn’t mean you have to make those mistakes.

Instead, think carefully about your own moves. Think carefully about your own opinions and perspectives. Think carefully about your own habits.

Forge your own path. You’ll be glad you did.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.