Debunking Common Myths About Spending and Saving Money
Are you making these common money mistakes? This article can give you insights into common money problems that can be solved easily with a few attitude adjustments.
Make a small change for some big results.
The best way to end your money worries and fear about losing everything is to empower yourself with knowledge and information. Learn about three common money myths that are sabotaging your efforts to save money and build your net wealth.
Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like.— Will Rogers
How can women save their money and feel financially secure? If you're worried about your financial future, the best way to cure your anxieties about money -- besides winning the lottery -- is to arm yourself with knowledge. Knowledge about money -- how to spend your money, how to save your money, how to track your money -- will help you make smart decisions in an uncertain economic climate. There are some things about the economy that you can’t control, but that doesn’t mean you can’t take responsibility for the decisions you make about how you handle your money.
The first thing you need to do is start clearing out your old limiting beliefs and myths about money.
Every time you borrow money, you’re robbing your future self.— Nathan W. Morris
Money Myth # 1. “A little bit of debt won’t undo my finances."
"Besides, don’t I need to have debt in order to start building a credit rating?”
A little bit of debt can and will grow into a big amount of debt over time if not properly managed. Did you know that the average household debt in the United States is about 114% of take-home income? The best thing to do is to avoid accruing any kind of debt in the first place.
If you must borrow money make sure it's to pay for things that will appreciate over time, such as earning a degree, going back to school to retrain advance your career prospects, purchasing a home that you plan to live in for a long time, or making smart renovations to your home to improve its resale value.
If you're young and need to establish credit so that you can apply for a mortgage later on, it's important to understand that you don't need to have debt in order to start building your credit rating. While having a credit card is the most common way to start building credit, that doesn’t mean you need to keep a monthly balance on it. Pay your credit card off in full, every month, and always before the due date. The worst thing you can do for your credit rating is to miss your monthly credit card payment, which can sometimes trigger a call from a debt collector.
Avoid accumulating credit card debt at all costs. If you must have a credit card, shop around and find a card with the lowest rate and low to zero annual fees. Think carefully before signing up for a rewards credit card. The temptation to spend in order to earn free stuff can can be strong, and may steer you into unnecessary consumer debt territory.
An investment in knowledge pays the best interest.— Benjamin Franklin
Money Myth # 2. "I don’t have enough money to start saving."
As long as you're relatively debt-free, that is you pay your credit cards off each month and you have very little consumer debt (i.e.; car loan), you should be able to start investing in your retirement savings plan. If you can put $25.00 a week into a high-interest savings account with an interest rate of 2%, after 10 years you would have $14,392.71. (Source: ING Direct)
It doesn’t cost anything to meet a financial advisor and find out what investment options are available to you. Don't be afraid of a financial planner turning you down if you’ve only got a little bit of money to invest. The days of minimum deposits are over. There a far more investment and saving products available to average folks than ever before.
- Calculators, Estimators, and Planners - Real Estate, Retirement, Investing - CNNMoney.com
Savings and real estate calculators and tools from CNNMoney.com
Money Myth # 3. "It’s too late for me to start saving for my retirement."
If you believe that myth, then yes, it is too late to start saving and you will never catch up. If you think you can’t save, then you’re right. If you think you can save, then you’re right too. Which one you choose is up to you. There are so many different types of retirement savings plans that can help you achieve your financial goals and live comfortably after you retire. Talk to a certified financial advisor to discuss your options.
You must gain control over your money or the lack of it will forever control you.— Dave Ramsey
Four Golden Rules for Frugal Living
1. Don't do anything that will put you or your family at risk. Things like cancelling insurance policies, not properly maintaining your vehicle, or tackling home repair projects that you are not qualified to do could be disastrous for your family.
2. Have a life. Don't let thrifty living become an obsession that isolates you from spending time out in the community and with people you care about.
3. Don't take advantage of other people's errors or mistakes. Be honest and report errors that are in your favor.
4. Own your choice to live a frugal lifestyle. Don't judge other people and the choices they have made. Every is entitled to make their own decisions about how they spend their money. Avoid being self-righteous about your choice to live a frugal lifestyle.
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Where did you pick up most of your beliefs, habits and values about spending and saving money?
This article is for information and research purposes only. It is not a substitute for professional guidance and assistance in planning your financial future. The tools, books and resources in this article are provided as a starting point for further discussions with your accountant or other certified financial professional.
© 2012 Sally Hayes