Money makes the world go ‘round, and that saying has never been more true. Even during a global economic crisis, businesses and individuals are still able to thrive financially – with the right mindset and tools in place.
However, there are a ton of costly myths and beliefs floating around that can impact your ability to save and prepare for your future.
Here are some of the top money myths that are guaranteed to keep you broke.
1. “I can just save later.”
This is the number one reason why young professionals fall behind on their retirement plans. No matter where you are in your career, the time to save is NOW.
The future is unpredictable for all of us, and no one knows when an economic emergency is going to be sent our way. Saving as much as possible now and starting your investment plan as early as you can is the key to building wealth with whatever salary you’re earning.
First things first, be sure to build up a savings plan that can cover a few month’s of living expenses. Then, you can start focusing on investing your spare income.
If your employer offers a 401K match, consider starting your investment journey there. Or, you can open your own Roth IRA to start building your own retirement plan.
2. “I worked hard for this, and deserve to relax.”
While this isn’t entirely false, this mindset can be detrimental to your savings and investment strategy.
Although we work hard for our money, it can be so easy to spend more than we should on “feel good” expenses that won’t help us in the long run.
Promotions, new roles, and long hours at the office shouldn’t go without celebrating. But, be sure to curb your shopping and keep it in line to prevent a cycle of spending that will harm your future plans.
3. “Insurance isn’t necessary.”
You might not think you’re vulnerable to a medical, environmental, or other emergency – but no one is exempt from life’s unexpected events.
Getting insurance for all of the most valuable aspects of your life is a necessary expense for anyone who is trying to build future wealth. Life insurance, most importantly, is the key to ensuring that your family will be taken care of under any circumstances.
When it comes to rental, homeowners, and car insurance, this bill is integral for maintaining the value of your asset.
Protect your investments, and your future, by keeping this bill in your budget rotation.
4. “Debt is never a good idea.”
Traditionally, many people believed that credit was evil and will do nothing but draw you into the debt cycle. After the Great Depression, consumers started hiding their cash under their pillows and only purchased items with money they had on hand.
Now, that couldn’t be farther from the truth. In fact, debt to some degree is necessary for building a strong credit score. While credit isn’t the only thing that matters in your financial profile, it’s a critical component of meeting other financial benchmarks like:
- Renting an apartment
- Getting a mortgage
- Approval for car financing
- Applying for a job
The key to managing your debt isn’t as simple as not accruing it in the first place. On the contrary, the most important thing is paying off your balance in the best way possible.
You can start working on your credit by simply applying for a new card or getting a title loan quote. Secured credit cards and loans are also helpful resources for starting to build credit.
To build your credit efficiently without accruing interest, it can be helpful to use your card regularly every month. As long as you pay off the balance every pay cycle, you don’t need to pay interest and you can still build your credit in the process.
5. “I should be able to have what my neighbor has.”
Like other entries on this list, this statement isn’t entirely false – but it can cause people to dive into a spiral of “keeping up with the Joneses.”
Comparison is the thief of joy. Understanding that everyone needs to carve their own path is critical when it comes to staying happy and satisfied with your own goals.
Understanding your relationship with money is critical for building long-term wealth, for any level of investor. Whether you’re starting at 20 or at 50, avoid these money myths to ensure that you’re making the most out of every dollar you make.
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