There are so many money myths out there that it can be tough to sort the fact from fiction. Sadly, not everyone has a good grasp on the basics of finance! Here are thirty myths about finances that you need to unlearn so you can secure your own financial future. The sooner you break these habits, thne better!
Investing Is Just for Rich People
How many times have you heard about stock market performance and just rolled your eyes because it doesn’t impact you? Investing isn’t just for rich people, though. Investing in stocks can be a great way to grow your wealth and achieve your financial goals.
Making More Money Automatically Means You’re Happier
Just because your paycheck goes up, that doesn’t mean you’re suddenly living on easy street. People are really good at increasing their spending to match their current income. Even if you get a nice raise at work, make sure you’re still saving and living within your means!
You Have to Earn a Lot to Save
Even if you’re not raking in the big bucks, you can still afford to save some money. Even putting back five dollars each paycheck will eventually add up! The important thing is that you choose a savings strategy that works for you consistently.
Debit Is Always Better Than Credit
Credit card debt can become an albatross if you over rely on credit. However, choosing to ignore credit altogether just because some people abuse it is like refusing to drink water because some people drown. It’s a tool and you should leverage it to your advantage.
Credit Cards Are the Only Solution
Okay, yes, we just told you that credit cards are a useful tool. However, don’t rely on them to get you through a financial emergency, either. Borrowing a lot of money from your credit card company is a good way to end up in serious debt—those things have pretty high interest rates, all things considered. Opt for building an emergency savings account instead.
You Need to Buy a Home Right Away
Renting isn’t ideal for some people. Spending money on a place you don’t own doesn’t feel great but remember that it’s just an option. Some people prefer the flexibility of being able to pack up and move whenever they’re ready. Also, remember that owning your own home means you’re on the hook for maintenance costs!
It’s too Early to Think About Retirement
Whether you’re in your 20s or your 60s, it’s never a bad time to think about your retirement account. The sooner you start saving, the sooner you’re going to have your money compounding interest for you. That’s exactly what you need to retire on time!
Debt Is a Dirty Word
It’s okay to take out loans sometimes. Yes, it can be stressful to owe money—especially when that money is compounding interest. However, leveraging your credit to meet your financial needs is okay! Just make sure you pay your debts back as efficiently as possible so you minimize the amount of interest you pay.
Read More: 20 Tips for Early Retirement
Just Let Someone Else Handle it
If you’re married and your spouse handles all of the finances, don’t just tune out of any discussion about money. It’s important for you to also understand how much your household makes and how you’re investing your money to achieve your financial goals.
Read More: 15 Tips for Financial Planning in Your 30s
You Don’t Need a Budget
Just because you’ve got enough money to make it through the month, pay all your bills, and still have some spending money, that doesn’t mean you don’t need a budget. Having a proper plan for your money can help you save efficiently and hit your major financial goals.
Read More: Investing Basics You SHOULD Already Know
Investing Is Too Risky for Your Money
Sure, there’s no such thing as a “certain” investment. However, following the trends that have made private equity firms and hedge funds hilariously wealthy is a relatively straightforward way to build your finances. It’s not “too risky,” it’s just the amount of risk you need to accept before potentially growing your investment.
Retirement is Cheap
You don’t suddenly stop wanting to eat tasty food and go on fun trips once you retire. Don’t picture yourself eating clinical meals and laying on your couch all day the instant you retire. Make sure you save accordingly and give yourself some wiggle room once you’re ready to hang up your profession.
You Have to Be Born Rich
Some people get a bit overwhelmed by how difficult it can feel to make money and get ahead. And, yes, it’s very hard to achieve upward class mobility, especially in the United States. Still, it’s not impossible. A combination of savvy investment, hard work, and some good fortune can make you, if not rich, at least somewhat comfortable.
You Don’t Need Insurance
Don’t convince yourself to skimp on your insurance, whether that’s medical, homeowners’, or car insurance. You literally can’t predict the future, and you have no idea how helpful it will be to have good insurance coverage in the event of an emergency. Nothing wipes out your finances like unexpected expenses.
Always Buy New Cars
A lot of people will tell you that buying an older, used car is a money pit. It’s going to have engine issues and just eat up as much money as a new car would have cost you, right? Well, not really. Used cars can be a great option for people looking to save money, especially if you buy one with a good track record.
A Car Is an Investment
It doesn’t matter how nice a new car is, either. It’s not an investment. Cars depreciate, they never gain value over time except in extremely rare circumstances. A car is functional, strictly for getting around. Don’t fool yourself into thinking you can make money on flipping it down the line.
You Should Lease a Car
In a similar vein, don’t bother with leasing a car. Just because the lease agreement is cheaper than your car payment would be, doesn’t mean it’s worth it. You get nothing at the end of the lease and have to just give the car back. You’re better off buying a used car than leasing a new one.
You’re Too Late to Start Saving for Retirement
While it’s true that you should start saving for retirement as soon as possible, that doesn’t mean that you’re too late if you haven’t started yet. The right time to start saving is today! Just go ahead and start getting money into your retirement account now so it can start accruing interest and you can make up for lost time.
Hard Work Always Means You Get a Promotion
If you’ve been toiling away at your job and you’re still not getting that promotion or raise you’re angling for, don’t despair. In the working world, it’s often as much about who you know as what you do. Make friends with the people in charge of those decisions and ask them, point-blank, what it’s going to take to make more money.
Switching Careers Isn’t an Option
If those people aren’t willing or able to offer those promotions you want, look at some of your company’s competitors. They might be willing to hire you on at a higher pay rate just to get you away from the competition. You might even have to switch fields altogether to make better money, and that’s okay.
It’s too Late to Go to School
If you’re seeking a higher paycheck, sometimes seeking out further education is the right move. It’s not too late to learn a few new tricks. Maybe a new industry trend has emerged that you can capitalize on by getting a new degree! Don’t hold yourself back just because you’re an adult now.
Trade School is a Bad Idea
And there’s never enough plumbers, electricians, and carpenters. Learning a trade is a surefire way to ensure you’ve got a steady stream of high-paying work. Attending trade school used to be looked down upon, but when people see the paychecks that tradespeople bring home they’ll change their tune.
Gold Is Always a Sound Investment
Common wisdom holds that gold and other precious metals are always a good investment. In the long term, these metals tend to increase in value. However, nothing is “always” a good investment, because the future is uncertain. Sometimes these metals lose value, so it’s vital to do your research before investing.
Just Make Minimum Payments
Minimum payments on debts, especially credit cards, are often a trap because of their interest rates. You might end up spending far, far more on credit card bills than the amount of money you initially borrowed. If you can afford it, funnel a bit more into that bill to get the interest to stop accruing against you.
Pricier Always Means Better
When you’re shopping, don’t just get the most expensive item because the price tag makes it seem “better.” The most expensive things are sometimes just there to be “conspicuous consumption,” which means they’re expensive for the sake of making wealthy people feel special when they buy them.
The Exception to the Rule
In some cases, it can save you money to buy a pricier item, though. If you use an umbrella often, you might save by buying a high-quality umbrella that will last for years instead of buying numerous cheap ones that wear out and break after a few months.
It’s Never Okay to Tap Into Home Equity
If you do happen to own your home, chances are good it’s increased in value since you’ve lived there. If you tap into your home’s equity, you can free up funds for anything from making a down payment on a car to using the money for home improvements to making your home even more comfortable for you.
Read More: Tim Walz Used His 401(k) to Pay for Kid’s College. Was That a Wise Move?
Downsizing Your Home isn’t a Smart Option
If you’re living in a home that’s getting harder to afford, you could consider downsizing to a more reasonable space. Maybe you could have a smaller floor plan, fewer bedrooms, or a tinier yard and save hundreds of dollars per month on your mortgage.
Read More: How to Start a Retirement Fund in Your 40s
Only Take the Path Set Out For You
Finally, the most pernicious financial myth you need to unlearn is the assertion that you don’t know what you’re doing. Assimilating advice from numerous sources (like this very article) and then forging the path that’s best for you, personally, is not just acceptable. It’s the only way to truly achieve your personal financial goals.
Read More: 10 Retirement Money Myths to Avoid
