When I was in my 20’s, I knew very little about finances besides savings. There were two things I knew how to do well, paying bills, and saving whatever is left. When it comes to personal finance, there is a lot of misinformation. Below are the 4 money myths to let go.
Investing Is For The Rich
Are you one of the people who think only the rich and wealthy can invest? No, everyone can invest. Investing is so much easier to do now than ever. Many times, all you have to do is learn how to invest, open up a brokerage account with ROBINHOOD, transfer money from your bank account, and you are all set. If you are starting now and you do not know how to identify good stocks, sign up here for my one-on-one coaching session.
These days you can start investing with as little as $1 because of fractional shares. No matter your income, $1 should be a good incentive for you to start investing today. The longer you wait, you delay your retirement. Investing is one of the best ways to build wealth, so do not let anyone tell you it is only for the rich and wealthy.
My Income Is Too Low To Save
This myth may be legitimate for some people, but not for everyone. One of the ways to save some of your monthly income is by living below your means. There is a famous phrase that goes “just because you can pay your bills every month, doesn’t mean that it is affordable.
Here is a good example. Let’s say you get pre-approved to buy a 30k car at the dealership, and you decide to purchase. Many times, your decision to buy that car is because the bank approved you for that amount. Now, you are stuck with a $500 monthly bill over five years. So ask yourself these questions? Is the car payments within my budget? Does it allow me to save money towards an emergency fund? Does it allow me to invest? If the answers to the questions is no, then you need to revisit your decision.
Always pay yourself first by automatically allocating money into your savings from your paycheck, then take care of other expenses. If you do it the other way round, there may not be money left afterwards to save.
If you have not already created a monthly budget, click here to receive a free copy of my budget worksheet.
Carry Low Balance On Your Credit Card To Increase Credit Score
Whoever is spreading this myth probably also thinks it took a day to build Rome. One of the 4 money myths to let go includes having a balance. A balance on your credit card means you are building up interest charges. The bank makes a profit on your interest payments, so they want you to have a balance month to month.
One of the ways to increase your credit score is to use it and pay off the balance in full every month. There are many ways to increase your credit score; keeping a low balance on your credit card is not one of them.
Buying A House Is Better Than Renting
The reason this myth is so popular is that it is part of the “American Dream”. It is almost as if you don’t own, then your life is unsuccessful. Owning a home is a good investment, but it is not for everyone. Buying or renting depends on your personal finance. There are other costs associated with owning that many people refuse to discuss.
You have to evaluate your finances and decide which option meets your needs while living below your means. When someone spread any of the above, let them know it is part of the 4 money myths to let go.
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Till Next Time,
Charly,
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