3 common misconceptions about money that could be holding you back from getting rich

According to self-made millionaire David Bach, you don’t have to earn a lot of money to get rich. You don’t even need remarkable willpower to build a fortune.

Bach exposes these misconceptions, and more, in his book “The Automatic Millionaire.”

Before you write yourself off as an “average earner,” consider these common misconceptions Bach outlines about money:

Mike Stobe/Getty

1. You don't have to make a lot of money to be rich.

'How much you earn has almost no bearing on whether or not you can and will build wealth,' Bach writes. 'Regardless of the size of your paycheck, you probably already make enough money to become rich.'

On the flip side, a salary with a bunch of zeros tacked on the end doesn't necessarily equate to wealth. At the end of the day, it's just a number -- and if the cash behind that number is not managed properly, it can disappear in the blink of an eye.

As Robert Kiyosaki, author of the personal finance classic, 'Rich Dad Poor Dad,' emphasises in his book, 'Most people fail to realise that in life, it's not how much money you make. It's how much money you keep.'

The good news is that anyone can start saving -- you don't need to be rich to invest and take advantage of the power of compound interest. You just have to be smart about it and start as early as possible. When you start to save outweighs how much you save.

Tristan Fewings/Getty

2. You don't need discipline to get rich.

The ultimate money managers don't necessarily work harder -- they don't have extraordinary willpower or discipline, Bach emphasises. They simply automate their finances, meaning their money is automatically sent to their investment accounts, savings accounts, and creditors before they even have the chance to spend it. This allows even the laziest of people to grow their wealth.

'Making your financial plan automatic is the one step that virtually guarantees that you won't fail financially,' Bach writes. You'll never forget a payment again -- and you'll never be tempted to skimp on savings because you won't even see the money going directly from your paycheck to your savings accounts. It also frees up valuable time and allows you to focus on the fun parts of life, rather than spend time worrying about whether you paid that bill or if you're going to overdraft again.

Follow two simple steps to automate your transfers and payments.

3. You can build a fortune on a few dollars a day.

'The trick to getting ahead financially is watching the small stuff -- little spending habits you have that you'd probably be better off without,' Bach writes. 'Most of us don't really think about how we spend our money -- and if we do, we often focus solely on the big-ticket items while ignoring the small daily expenses that drain away our cash ... We don't realise how much wealth we might have if, instead of wasting our income, we invested just a little of it.'

He illustrates this idea with what he calls 'The Latte Factor,' which basically says that if you ditch your $4 latte every morning, you'd have quite a bit of money to contribute towards savings -- about $30 a week, or $120 a month. Over the course of a few decades, that money could grow substantially.

'Whether you waste money on fancy coffee, bottled water, cigarettes, soft drinks, candy bars, fast food, or whatever it happens to be -- we all have a Latte Factor,' Bach writes. 'We all throw away too much of our hard-earned money on unnecessary 'little' expenditures without realising how much they can add up.'

To give you an idea of how much money you could have if you identified and eliminated your Latte Factor, he gives the example of making a $5 purchase (the average cost of a latte and a muffin) each day, which would cost you $35 a week and about $150 a month. If you invested that $150 instead, assuming a (very generous, admittedly) 10% annual return, you'd wind up with $30,727 after 10 years, $339,073 after 30 years, and $948,611 after 40 years, he explains.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.