Six Money Myths We Commonly Hear
There are countless classic sayings about money that we still use today. Sayings like, “money doesn’t grow on trees”, “time is money”, and “money makes the world go round.” So while some classic sayings hold true, there are a few sayings that quite frankly, do not. Everyone wants advice on managing their money, so when someone offers it for free, we generally listen. We hear too many of these ‘Money Myths’ on a day to day basis. We figured it was about time that we debunk a few and clear up some misinformation. So here is a list, made up of six Money Myths that you should reconsider.
1) I Don’t Need an Emergency Fund I Have Credit CardsHaving a credit card is a generally accepted component of life with some even going as far as using it as a milestone of getting into adulthood. Having a credit card and using it for emergencies can be a great way of getting ourselves out of a sticky situation, but living off one, is never a great idea. Credit cards should be used for one-off emergency payments or in a manageable amount that gets paid off before the end of the month. If we are fired or made redundant, it could take us many months to find a new job, so it is crucial we have saved up income to spare. An emergency fund creates comfort for us and can save us when we desperately need it. Having a few months of our wages saved up and sitting quietly for a rainy day, can provide peace of mind and save us from taking on high interest incurring debt that will make it harder in the long run.
2) Buying a Home is Better than RentingBuying a house is a great investment, and we are not trying to take any credibility away from this advice, but it isn’t always the right advice for everyone. Some people view paying rent as throwing money away, but this isn’t necessarily the case. Renting can provide us with cheaper accommodation and fewer strings attached, meaning less things are preventing us from going elsewhere and chasing our dreams. Yes, it sounds cheesy, but there are numerous cases of individuals getting a house early and then regretting the decision later on. If purchasing a house is an affordable option and is something you want to do, then by all means, go ahead and do so. However, if you have goals that require you to move and you wish to live more freely and fluidly in life, then renting could be a better option for a while.
3) Your Boss Will Give You Your Pay RiseSome of us think that raises only occur at annual reviews, and if we miss out this year then maybe we will get it next year. Truth be told, bosses don’t really want to give us a raise. If we believe we deserve one, then maybe it’s time to buck up the courage and ask. We aren’t always going to be handed everything on a silver platter. If we wish to get a pay rise, then we need to go out of our way, show why we deserve one then ask.
4) You Should Pay Off Your Student Loan As Fast As PossibleThe classic student loan debate, should we pay it as quick as possible or should we just let it sit there? Funnily enough, this is probably the one time where we will say we shouldn’t try to make extra payments with this debt. A student loan doesn’t accrue interest, so we don’t have to worry about paying more. Also, having a student loan doesn’t necessarily affect the likelihood of us getting declined when borrowing in the future, as it doesn’t change our credit score and lenders will look past student loan debt. Instead of making extra payments to our student loan, we are better off using that money to pay off other interest-bearing debts or to put the money into our savings. Once we have the correct tax bracket set in place, our student loan will automatically be getting paid off by portions of our wages. It’s best just to sit back and relax when it comes time to paying off our student loan, as we won’t even notice the deductions.
5) You Don’t Earn Enough to SaveThe saying, “I don’t earn enough” is more of an excuse than a saying, as countless times we have all used our level of costs and level of income as an excuse not to put any money away. Most of the time this is not actually the case, the real issue is the fact that we will always spend what we earn. Our tip to resolving this issue is to pay ourselves first before we pay anyone else. If we put money into our savings first then put our usual dedicated amount towards our bills, we will be left with what we have to spend for the week. Paying ourselves works as it sets yourself a budget and allows you to function within your means. You will quickly find yourself eliminating unnecessary expenses in no time.
6) All Debt is BadWe have been told by numerous people that debt is bad and that we should avoid it at all costs. Sure, carrying maxed out high-interest credit cards is a very damaging form of debt, but not all debts are bad. Borrowing for the likes of a home, an education, a business or to simply ensure plans come into fruition, are all forms of good debt. If we borrow within our means and can arrange a manageable repayment plan, then we can use borrowing money to our advantage and can get the things we need in life at the right time. If you want to know more about what forms of debt are out there, then you can check out our blog here.