Managing money can seem like a complicated process. Between the media, family, and friends, it’s challenging to keep track and know what advice to trust when there are so many different opinions. However, it is possible to stay on top of everything. You just need to sort through the myths and find the relevant information.
Sound interesting? Below, we are going to debunk and explain ten common ones that you may have heard.
Let’s get started!
Myth One: Budgeting is too much effort
At first glance, it’s easy to think that budgeting is a complicated and inconvenient process. However, it doesn’t have to be. If the process seems too overwhelming, you’re probably going about it the wrong way. Say goodbye to spreadsheets and notebooks, and opt for an app on your phone. There are so many options out there, and it will be much easier to track your expenses. Check out how to save money by budgeting to help get you started.
Myth Two: Investing is only for the rich
Most people assume that only rich people invest, but there are investment types out there, with price points for everyone. From these dividend stocks Canada to real estate, cryptocurrency, and mutual funds. The options are endless. If you want to get started but aren’t sure how, consider speaking to a financial advisor. You never know; you might be able to turn $100 into $1000.
Myth Three: Renting a home is a bad idea
“Renting is dead money.” It’s a phrase that many of us have probably heard before. However, despite what you may have been told, you shouldn’t be afraid to rent a property. Yes, it might not be as great as having your own physical asset (which you can turn into an investment later on), but it can work out cheaper, and you don’t have to deal with all of that pesky maintenance. Owning a home is a personal choice, so don’t feel pressured if it’s not the right move for you.
Myth Four: Credit cards will only lead to endless debt
Credit cards can cause debt. There’s no denying it. However, saying that it is endless and only going to cause trouble isn’t very fair. The fact is, credit cards are only bad if you spend recklessly and don’t pay them back in time. By all means, use them when absolutely necessary, but don’t rack up a huge bill with money that you don’t have. Like most things in life, you can enjoy them… responsibly.
Myth Five: You sacrifice fun when you save
Putting away money regularly must mean you can’t ever do anything fun, right? Wrong. There is no reason why you can’t enjoy life’s luxuries and save at the same time. In fact, by being money-cautious, you can afford to go out and have fun. Whether you travel the world, go to your favorite band’s concert, or buy that luxury bag you’ve always wanted. You’re using your own money, and it makes everything much more rewarding. Take a look at these money-saving tips to get started.
Myth Six: All debt is bad
The word debt can seem scary at first, but it’s important to remember that not all of it is the same. The unpaid vacation to Disneyland you have on your credit card is much different from your student loan that will improve your earning capability in the future. Yes, it all needs to be paid eventually, but don’t freak out if you add everything up and the number is enormous. Pay off the important stuff first, and work towards the rest. Believe it or not, you will get through it eventually.
Myth Seven: You need a huge emergency fund
Having around 3-6 months of living expenses saved in your emergency fund is excellent. However, understandably, this goal is not easy to achieve right away. Don’t worry so much about putting everything you make away, and instead start off slowly. Aim to save for common unexpected circumstances, such as car repairs or medical bills. After this, you can worry about building it up. It shouldn’t be a stressful concern.
Myth Eight: It’s too early to save for retirement
“Retirement is for when I’m old, so I shouldn’t have to worry about it right now.” Again, this is another false statement. It is never too early to save for your retirement. In fact, the earlier you begin, the better. The sooner you get a fund started, the more you will have and the better off you will be. Who knows, you may even be able to retire early if you are smart with your investments.
Myth Nine: Bankruptcy cleans your slate
Many people assume that declaring bankruptcy will wipe all of their debt away for good. However, while Chapter 7 can eliminate medical and credit card bills, it will not get rid of child support, unpaid taxes, and student loans, and it isn’t always granted. At the end of the day, it’s best to avoid it altogether unless it is absolutely necessary. The last thing you want is to say goodbye to your credit score. While it might seem impossible right now, it will recover eventually. There is always a possibility to turn things around for the better.
Myth Ten: Managing finances is too difficult
Finally, while managing finances can certainly seem complex at first, it is not that difficult. By being proactive and tracking your spending, you can save and get out of debt quickly. There are many different resources, apps, and trained professionals that can provide you with the support you need. The key is to crack down on your habits, spend wisely and do regular research. You’ll be a pro before you know it.
And that’s it! These were ten common financial myths debunked. By knowing what to watch out for, you can relax, stress less, and manage your money in the best way possible.
What do you think? Are there any other myths that you would add to this list?