When it comes to money myths, there are thousands floating around. But, did you know that these myths could be holding you back from actually earning more?
We’re going to debunk 10 different myths surrounding money and hopefully, they’ll help you be aware AND break any bad money habits you may have.
You Can’t Invest Unless You’re Rich
Investing is for the rich, right?
This is actually a myth and anyone can invest. You don’t need a lot of money to start investing, and there are even apps which do it for you. For example, you can hook the Acorns app up to your checking account. Each time you use your debit card, it’ll round up your purchase to the nearest dollar. It’ll stock these extra cents away until you reach $5 and then, it’ll invest in a portfolio for you.
Purchasing Your Home is Better than Renting Your Home
It seems like everyone is in a hurry to buy a home. Maybe, people mistakenly believe that buying saves money over renting. However, stop and think about it.
Who is responsible for the property taxes and repairs if you rent? Your landlord.
But if you buy your own house and become your own landlord, those things can really add up. Also, rent is usually cheaper than a mortgage, depending on where you live.
You Don’t Earn Enough to Save Money
Everyone wants an emergency fund or a healthy retirement or savings account, but only a few people have it. The myth that you don’t earn enough to save money is simply not true.
Maybe you don’t earn enough to have everything you want, but you do earn enough to save. Set up a direct deposit savings account and route $25 or $50 from each check in there. Leave it there and it’ll grow. You can’t miss the money that you never had. If you’re afraid that you’ll impulse spend, stick it in a secured account.
There’s No Way to Make Money Fast
Where there’s a will, there’s a way.
If you’re not making enough money to support your lifestyle and you can’t or won’t cut back, look for side jobs. If you’re wondering how to make money fast, try selling your excess items, donating plasma, take on a second job or freelance. There are entire platforms dedicated to freelance work, you just have to put in the time and effort.
Don’t Pay off Your Credit Card Balance Each Month
This is one of the scary money myths that a lot of people believe in. The myth says that you have to carry a small balance on your credit card each month to improve your credit score. However, you’ll pay more for doing this because you’ll end up paying interest on said balance. This interest can be as high as 29.99-percent. Pay off your balance each month and avoid paying more for interest charges.
You Don’t Require Discipline to Keep Money
Many people confuse wants and needs and this leads to impulse spending. You have to have discipline to save money. You also have to be able to understand when you want something and when you need something.
For example, do you need that $2.50 cup of coffee each day or is that a want? If you spend that five days a week, that’s $50 per month gone that you could be saving instead.
You Don’t Need an Emergency Fund Because You Have Credit Cards
If you suddenly lose your job, do you have enough money to pay your expenses?
Most people mistakenly believe that they can rely on credit cards in a pinch. However, these credit cards have interest attached. You’ll end up paying so much more back than you would if you had an emergency fund. It’s also a slippery slope into debt. You want a minimum of four to six months’ salary stocked away to be safe.
It’s Embarrassing to Think or Talk About Money
Yes, finances can be an uncomfortable topic. But, if you don’t think or talk about your money situation, how will you know what you have to do in order to pursue your passions?
This money myth is especially damaging in households where one or both partners work. You should both know exactly where you are with your bills, savings, and money. If you don’t, you may miss bills, argue over misconceptions or have money problems in general.
Cash is the Safest Payment to Keep on Your Person
If someone steals your purse or wallet and all you have is cash, now what? You most likely won’t ever see that cash again, and now you’re in a bind.
If you had debit or credit cards and the same thing happened, you’d have a safety net. Banks and credit card manufacturers have systems in place to stop fraud and even reimburse you if your cards are lost or stolen. They’ll replace the money and give you a new card. You may even get emergency funding.
Two Incomes are Best
Unless you have a budget set with your partner, having two incomes can make you more careless when it comes to money. Also, this won’t matter if the money you’re both bringing in is less than your monthly expenses. You have to take a good long look at your monthly expenses and compare it to your income. Tracking everything you spend and physically putting it in a budget is one way to help you figure out where your money is going.
Bottom Line
These 10 money myths give you an excellent place to start when it comes to examining your own financial situation. The only thing holding you back from saving money is you. The faster you accept this, the faster you can change it and be on your way to a more stable financial future.