Do you ever think about how little most people actually know money? There are so many common misconceptions out there about how to handle money and how much of it you actually need. Financial myths are all around us and there is no great way to tackle them all at once. So I’ve decided to try, just a few at a time. So here are 7 of the many many financial myths that you probably believe!
7 FINANCIAL MYTHS YOU PROBABLY BELIEVE
I NEED MORE MONEY TO START SAVING
I’ve heard this from many people in my life. “I don’t have enough money to pay my bills, I can’t start saving.” The truth of the matter is, this just isn’t true. Even if you save $10 a week until you get your income up, that’s still over $500 in a year that you’ll have in case of an emergency.
The people that think they can’t start saving money are usually also the same people who live way over their means and spend their money on things they don’t need. There is so much opportunity to cut expenses in order to start really saving your money. Check out our post about 10 things to cut out if you want to save money!
If you really think you need to increase your income before you can start saving, then do it. Increase your income. There are so many opportunities for side jobs and extra income that you can start today.
YOU NEED TO BE RICH TO START INVESTING
The reason why so many people think this is because almost all the people who invest are rich. The thing is, most of them became rich BECAUSE they started investing.
The first step to investing is a time investment. You need to start out by learning everything you possibly can about investing so when you start your anxiety levels will be lower.
Investments are a great way to build wealth! If you start with $100 until you can afford to stick more money in then do it. This will give you a great opportunity to test the waters and see where you end up. Chances are you’ll learn so much with that $100 and you’ll make a couple dollars in the process.
YOU MUST COMBINE ALL FINANCES WHEN YOU GET MARRIED
There are so many married women out there that don’t have any idea how their finances are handled. They just allow their husbands to take the reigns and they learn nothing in the process. The issue with this is that there is such a high divorce rate in our society and women become single women or even single moms later in life and they don’t have any knowledge!
Can you imagine being a single mom of 2 children and having no idea how to make and follow a budget? Your children aren’t going to learn good money practices from you and your family isn’t going to get very far financially.
It is totally acceptable to have 3 bank accounts between one couple. One personal account for each of you and a joint account. The joint account will be the account where money is transferred to pay mortgages, bills, and for your children’s school for example. This will teach both members of a couple to handle money intelligently and allow everyone to have more financial freedom!
HOMES ARE ALWAYS A GREAT INVESTMENT
This is something that I’ve always believed. I thought that houses will always appreciate in value and will never lose me money. The reality of the situation is that there are many situations in which real estate is not a good investment, and there are risks involved where you could lose a bunch of your money.
When you think about the 2008 recession that we experienced, you think that we’ve completely bounced back. There are still some homes out there that are just reaching their 2008 value. In 10 years they haven’t increased their value at all because they’ve just been recovering.
There is also a chance for natural disasters when you buy a home. There are so many people who have experienced hurricanes or tornados that don’t have the proper investment in insurance and they lose everything.
The final reason why your home may decrease in value is if there is a change in the neighbourhood around your home. You never know what the city is going to decide, maybe a new train line will be put right beside your home, maybe the neighbourhood will become a hub of gang activity. You really never know what is going to happen.
YOU CAN’T GO TO COLLEGE WITHOUT LOANS
Student loans just seem to be a way of life in order to get an education these days. So many of us (including me) leave college with thousands of dollars in loans and no income to pay them back. It’s a hard way to live, trust me.
There are so many things you can do in order to go to college without leaving with crippling debt and nowhere to turn. You just need to focus on the goal and work your butt off to make it happen. If you want to learn more, read our post about how to graduate debt free!
YOU WON’T HAVE TO WORRY ABOUT RETIREMENT BEFORE 40
You’ve heard the saying “Time flies when you’re having fun” right? It’s true, time flies. Before you know it you’ll be 65 and be looking at your life in a rearview mirror.
Starting to save for retirement now is going to help you to build wealth in the long term. You may not think that investing small amounts in retirement savings now is a big deal, but you need to remember the beauty of compounding interest. It’s a crazy thing when you can earn money from money that you earned from interest.
You don’t HAVE to worry about retirement today, but you should. The more money you have, the earlier you can retire. And the more comfortable you’ll be.
THE LOWER THE CREDIT LIMIT THE BETTER
Having a $1000 credit limit but you’ve used up $900 of it is not a good thing. If you’re going to hover around $900 for a credit card, you’d be better off with a limit around $3000. Why? Because part of your credit score is calculated using your “credit utilization”. This means that it takes into account the total amount of credit available to you and sees how much of it you use.
If you have less than $300 on a $1000 credit card, then the lower limit is great! But don’t get too close to the limit or your credit score will fall.
I really hope this post has shed some light on these 7 financial myths that you probably believe. If you know of any other myths that people believe, leave them in the comments and let me know!
Thanks for reading,
Hey! My name is Taylor O’Halloran and I’m a huge fan of saving money any way I can.I’m obsessed with dogs and I love all kinds of cheese even though my stomach hates it. I’m a recent university graduate who just wanted to do her own thing and see what happens! Follow me on the journey!