Money can be such a taboo subject because people tend to believe very different things about it.
Quite frankly some peoples take on money is completely twisted upside down.
Today I want to run through some money myths that will make you pause for thought.
You might even believe a few of these yourself and that’s ok. As long as you are prepared to look at both negatives and positives in every situation and make a judgment call from there you are on the right path.
There will be some circumstances where you will just think outright no this is wrong and there may be a few things that will make you pause for thought.
Let’s just jump straight in there and get these money myths busted!
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11 money myths busted that people often believe
1. Debt is a normal occurrence
I’m not quite sure why people believe this money myth so strongly but they do.
We have become a society where everything is just so fast paced that no one wants to wait for anything.
If you are hungry, get a takeaway.
If your tv is broken get a new one on credit
Need a car, get one on finance.
All of these things can quickly get you into a lot of financial trouble.
Most homes today have some type of debt, whether it be credit cards, loans or money borrowed from friends or family. Any time you borrow money from someone it is called debt.
Today someone has a debt of $10,000 and no one blinks twice because it is expected that as life goes on we accumulate debt. It’s part and parcel of growing up.
This is simply not true.
If we were to simply exercise a bit of patience and disciple half of us would not be in the situations that we are in right now with money.
Once you accept that debt it just a part of life you have already lost the battle.
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2. Borrowing money can be a good thing
I’ll just say it right now, having to borrow money is never a good thing, seldom does it come for free and there is usually a consequence for doing so.
How does it make you feel when you owe someone money that you borrowed? When you see that person do you feel comfortable?
That feeling alone should tell you that borrowing is not a good thing.
People say that borrowing helps you to become more disciplined with money. Does it really?
My personal experience of borrowing money is nothing but stress and worry.
I’m not sure in which circumstance it can be a good thing.
I would much rather pay for something outright than have to borrow the money and then start sweating when it comes to having to pay it back.
You might say that well if I don’t borrow how can I buy the things that my family needs?
Well, I have 1 question for you:
1. Will your family suffer as a direct consequence of not having that thing? or having to wait for you to save up for it?
You have to answer that honestly.
I know that in most cases the answer is no.
In actual fact, by borrowing the money you are actually doing your family a disservice as you will have to pay interest on the money borrowed therefore paying more money for it.
3. You need to be rich before you can invest
I must say here that I used to believe this myself. It’s an easy trap to fall into but the truth of the matter is that you don’t need to have thousands and thousands of dollars in the bank before you can start investing.
You can even invest with as little as $10.
Acorns is a really great way to test the waters with investing.
Each time you make a purchase Acorns will round up the money you have spent and save and invest that money for you.
For example, you buy lunch for $6.70, Acorns will round it up to $7 and invest the $0.30 for you.
It’s a great great way to get your feet wet with saving and investing.
The only thing I would say to be careful of here is to not get carried away with it. Only invest what you can comfortably afford to lose.
It’s better to start small until you build up your confidence.
4. It’s impossible to be free of debt if you live on one income
With good discipline, it is possible to live a comfortable lifestyle on one income. Your partner doesn’t have to make thousands and thousands of dollars each month for this to happen.
I won’t lie to you though it does take discipline on your part.
After a little while, it all becomes second nature to you and you won’t even notice it anymore.
Being frugal is a lifestyle choice and a good one to choose no matter what your household income is.
5. It’s in your interest to own a credit card
Now credit cards on their own aren’t really bad but you MUST know how to use them in the right way.
Unfortunately, most people don’t and just having that credit card walking around with you is a temptation for you to go into debt.
It will only take one moment of weakness for you to whip out that credit card and use it.
For the most part credit cards can give you some benefits like cash back on certain purchases or be interest-free for a particular period of time.
Whilst that all sounds lovely, the reality is that most people either forget to pay off their credit card in time before they incur any penalties or just can’t afford to pay it all off at once after having spent the money.
When you take a good look at the actual benefit that you will receive compared to the potential debt you could find yourself in, is it really in your best interest?
6. Renting is wasting money
I understand the theory behind why people think that renting is a waste of money but sometimes trying to buy a house is just not within our reach at that moment.
Most homeownership deals come with having to put own a huge deposit before you can even be considered for a mortgage.
With so much looming debt over our heads today, how many people can comfortably afford to do save up a large deposit?
If you know you can’t afford to do this now, don’t try to overstretch yourself financially. Rent a house that is within your budget and take the time you need to save up.
What you shouldn’t do is to rent a house that you know you could never afford to buy.
I have seen people do this time and time again and when it comes to purchasing their own home they can’t seem to find anything suitable because they have been living beyond what they can actually afford.
Yes, its all well and good knowing that you might get a great deal on a rental property but if you get too comfortable with it it will be very hard for you to get your own property in the long run that can compare.
I have friends who have found themselves in this exact same situation and when it came to buying their own home they actually felt that they were taking a step backward rather than forwards.
Just something to bear in mind.
7. It’s best to buy a brand new car
This is a huge myth and I have heard this one myself so many times.
The logic behind it is that if you buy your car brand new you are likely to have fewer problems with it and it will be safer to drive.
There is an element if truth in this but it is not THE truth.
Firstly there are plenty of very safe second-hand cars out there on the market, you just have to be willing to look.
Secondly, once you buy a brand new car after the first few months the car depreciates dramatically. Why not snag yourself a car in that situation rather than be the one to lose the thousands in depreciation?
Instead of spending all that money on a brand new car why not take the time to look for a really good second-hand car that has never been involved in an accident.
Use the money that you have saved to for something more worthwhile.
You can even save the monthly payments that you would have spent and invest the money instead.
8. It’s ok to borrow if you can pay it back
Is it really ok to borrow if you can pay it back?
It might seem as though the answer here is yes but it is not. If you know you can pay it back then it’s better that you save up your money and buy the item outright.
Not only will you have saved yourself money on interest but you will also have paid outright and therefore have peace of mind that you own it without any debt. You will sleep better at night.
Let’s not forget that sometimes life happens too. Whilst you might think that you can afford to get a new 56-inch curved tv on credit, what happens if God forbid tomorrow you lose your job or your car breaks down and that money you allocated to paying for your TV now has to go somewhere else?
You see if you plan your life this way as there are just too many things that could potentially go wrong.
If you know you can afford the cost each month, then save your money and pay for that TV outright with peace of mind.
9. I can always save later
So many people believe in this one. “I can always save later”
The truth is, what are you doing differently today to make it easier for you to save tomorrow?
If you can’t take actionable steps to ease your financial situation, whether that be paying off debts first or working a second job, how do you think your circumstances will change?
It seems to me that you will be in this same situation next month and the month after that too.
Saving takes discipline whether you like it or not. It takes discipline to say no to yourself, or your children when you want something that you feel you really need.
It’s not fun but it is disciplined to sometime deny yourself.
Have you ever noticed that people who are debt free are incredibly disciplined when it comes to money? It’s not a coincidence.
10. I will never have enough money
As a man thinketh so is he…if you always think that you will never have enough money then it will happen.
If on the other hand you truly believe that you can get a grip on your personal finance situation then it will happen.
The biggest battle you will have with money will be in your mind.
You will have to battle it daily in order to achieve what you want.
I know some incredible people that have been able to achieve some amazing things just because they believed that they could do it.
The only difference between you and them is that they believed that they could. Do you believe you can?
If you believe it you can achieve it.
You can have enough money if you believe it and are prepared to work hard for it.
11. Budgeting is only for people who are broke
This is the biggest money myth that we must expose!
Budgets are for everyone, no matter the size of your bank balance.
If you go around and ask people if they have a monthly budget the people that are in debt are usually the ones that don’t budget at all.
It is a common myth that budgeting is only for people who are broke.
This couldn’t be further from the truth.
You are broke because you don’t budget not the other way around.
Having a budget is necessary if you want to win with money.
You need to be able to see exactly what money you have coming in and going out each month.
If you don’t do this you won’t have a chance to see any pitfalls headed your way before they happen.
If you don’t already have a budget then stop what you are doing and download my free budget worksheet.
Final thoughts on money myths busted
There are so many money myths floating around that sometimes it can be hard to know what is right and what is simply just not true.
You should always research things for yourself and see what makes sense to you.
Just because everyone is doing it doesn’t make it the right way.
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