There are 7 common myths about money that many people believe, and debunking these can help foster a healthier financial mindset. Here’s a closer look at each myth:
My credit score is everything.
While a credit score is an important factor in determining your financial health and can influence lending decisions, it is not the sole determinant of your financial well-being. Other factors, such as your income, savings, and spending habits, also play a significant role in your overall financial situation.
Additionally, personal relationships, career stability, and even factors like insurance rates can be affected by different aspects of your financial profile. Therefore, it’s essential to take a holistic approach to managing your finances rather than focusing solely on maintaining a high credit score. The credit score, in essence, only judges you based on your relationship with debt, less with money.
I’m too old to start creating wealth
Remember, whether you are 25 or 75 years old, there is always a future ahead of you. The average life span has increased significantly in recent years thanks to technological advancements in the medical industry. So you owe it to your future self to build financial resources that will outlast you no matter how long you will live.
The Higher the Price, the Better the Product
This myth is the reason why many multi-million dollar brands thrive while making less-than-stellar products. It’s the notion that if I spent a lot of money on it, it must be a quality buy. Paying more doesn’t always mean you’re getting a superior product.
Buying a Home Is Always Better Than Renting
While homeownership is frequently touted as a key component of the American Dream, it’s important to recognize that renting can offer several advantages that make it a more suitable choice for many individuals and families.
Renting has always had a negative stigma based on the idea that those who rent are throwing away money or paying someone else’s mortgage instead of building their own wealth. Actually, owning a home also means less flexibility, and brings with it countless additional costs such as homeowners insurance, community fees, repairs, taxes, and more.
Your Expenses Will Be Lower After Retirement
The belief that “Your Expenses Will Be Lower After Retirement” is a common myth that many people tend to hold. While it may seem logical to assume that once you retire, you will have fewer expenses, the reality can be quite different.
Many retirees find that their healthcare costs actually increase as they age. With the potential for more medical visits, prescriptions, and long-term care needs, these expenses can quickly add up, often surpassing pre-retirement healthcare costs.
You Need a Lot of Money to Invest
With technology today, it is now possible to invest small amounts of money repeatedly, which will compound into significant investments over time. Spare change apps, like Acorns, can allow you to round up your purchases and invest the change. So maybe it’s time to give those coins a chance to grow.
More Income Equals More Wealth
The fact is that when people start earning more, they often spend more, buying things they’ve always wanted or felt they needed. Going after those high-end purchases results in greater financial responsibilities, which means less saving. When it comes to wealth, it’s not about what you earn but what you keep.
