Face it, there’s A LOT of misinformation about personal finance out there. Indeed, those money myths will quickly leave you broke and feeling hopeless.
Truthfully, we’ve all made some mistakes with money. For some, maybe you bought into all the bank marketing and wound up with a payday loan. Or perhaps you took on more risk than you could afford.
Either way, let’s take a look at the money myths that will hurt you rather than help you.
Before we begin, I’m going to put in a couple of shameless plugs. For one, I strongly recommend taking a look at The Total Money Makeover by Dave Ramsey. This is the best book out there on taking control of your money. Check it out today!
Do you wonder how real millionaires live and how they made their money? Everyday Millionaires by Chris Hogan is the largest study ever on millionaires. Believe it or not, most millionaires don’t live super flashy lifestyles. Instead, they’re ordinary people who work ordinary jobs. They just saved and invested wisely. Check out this fascinating book today!
Finally, if you want a simple, step-by-step guide on how to get out of debt, check out my FREE eBook! Just enter your email address below and I’ll send it right to you!
Money Myths That Will Leave You Broke
Each of these money myths will have a few recurring themes to them. Some of these include lack of research, lack of intentionality, or just plain ignorance.
Now that you’re here, it’s time to educate yourself! Seriously, you don’t have to be a financial genius to master your finances. But if you can avoid the mistakes below, you’ll find yourself flourishing!
1. Debt will help me get ahead
No, no no! This is the king of money myths! Debt does not help you get ahead! On average, Americans pay $1,233 each month towards debt. The biggest offenders are mortgages ($1,255/month), car payments ($493/month), and other personal loans ($458/month).
Do you feel financially free with all that money flying out of your wallet every month? I would think not!
Instead, I want you to think of debt as a thief! It steals from your future, your family, your dreams, and your joy!
Also, think of how much you could invest or save! I think there are other things you would rather that money go towards.
Sure, you if you use debt you could get a nicer car, a bigger TV, or go to a more expensive college. But you’ll end up paying more for it. And you’ll have a reminder every single month of your decision!
Believe me, it’s much better to find a way to cash flow things. Personally I live on this principle: If I can’t afford it, I don’t buy it.
*Note: The only exception I make to this is when it comes to a mortgage. I believe it’s acceptable to take out a 15-year conventional mortgage to purchase a home. But even then, I don’t believe it’s “good” debt. More like “less-bad” debt.
2. I don’t make enough money to budget
First of all, it might surprise you how many people don’t have a simple monthly budget. As a financial coach, I come across people all the time who don’t have a written plan for their money every month.
And their excuse? “I don’t make enough money to budget.”
This is the myth of myths! If you have any money coming in at all, you can make budget.
In fact, it’s nearly impossible to have financial success and NOT budget!
But for real, all you do when you budget is tell your money where to go every month. That’s it! And when you do it, it gives you power over your money.
Otherwise, you’ll wonder where your money went at the end of every month. Now is the time to train your money and tell it what to do!
3. I can’t save much money right now, so there’s no point in trying.
We all run into hard times. Unfortunately, hard times last longer for some than it does for others. However, that doesn’t mean you should forgo saving what you can.
Even if you can just put back $10, $20, or $50 a month, you should give it a try. Just doing that will put you ahead of one-fourth of workers in America.
Again, it all comes back to budgeting. Do you know where your money goes every month? If not, you need to take control and find out.
If you find yourself continually coming up short, start looking at making some sacrifices. Cut the cable bill, downgrade the phone plan, or stop eating out.
But what if you still come up short? Start looking for some ways to increase your income, at least for a little while. Pay off some debt to increase your cash flow, then you can start saving even more!
4. I can start saving for retirement later
True, for a young person retirement can seem like a long time away. But the years of your life will come and go quicker than you imagine.
Therefore, it’s essential that you start saving for retirement as soon as possible. After all, you REALLY want to take advantage of the miracle of compound interest.
Let’s look at an example. Chuck is 22 years old and decides to start setting aside some money for retirement. All he can do right now is $200 per month. Assuming he averages 8% per year, Chuck will have $1,054,907 at 67 years old. He’ll be a millionaire if he doesn’t change ANYTHING!
Now let’s say Joe decides to start later at 32 years old. He decides to invest double the amount Chuck did at 22 years old, which is $400 per month. Investing $400 per month from age 32 to 67, assuming an average return of 8% yields $917,552. Joe had to invest twice as much each month and still didn’t hit the million-dollar mark!
Do you see how starting early makes a huge difference? I sure hope so. Therefore, start investing for retirement as early as possible!
5. The stock market is too risky to invest in
Does the stock market go up and down? Indeed, it does. However, the stock market also has a long history of growth.
And despite what you might think, it has never hit rock bottom.
“But what about those horror stories you hear about someone losing everything?”
You’re probably thinking about incidents like the one with Enron back in the early 2000s. But let me tell you a dirty little secret with that. The people who generally lose everything in the stock market are those who invest primarily in single stocks.
In other words, they put all their eggs in one basket. If you invest only in one company and that company goes under, then you lose everything.
Just make sure you work with one who teach you rather than talk at you.
6. Insurance is a waste of money
Money myths like this one can REALLY leave you broke. And I mean broker than broke.
Indeed, none of us like seeing insurance money going from our paychecks every month. However, insurance serves as a safety net in the event something really bad happens to you.
And yes, something bad will happen to you eventually. You will crash your car, get really sick, or even die. Then what? If you don’t have insurance to take on the risk, then you’ll end up having to foot the entire bill.
If you don’t have the money, then you have to go into debt. And if you can’t repay your debt, you’ll have to file bankruptcy. That’s the last thing you want to do.
Having some basic insurances like health, auto, home, life, and long-term disability will help you keep things in order.
Of course, you’ll want to stay away from gimmick insurance like cancer insurance, whole life, and others. But you still need the basics!
For more information, check out my article on the types of insurance you need. And don’t believe the money myth that insurance is unnecessary.
7. It’s a good deal, so I should buy it now or I’ll miss my chance
Here’s the deal with deals: they’ll come back. You won’t “miss your opportunity” or miss out on a deal. That’s true whether it’s a 4th of July sale or Black Friday. Sales happen year-round.
These are all just marketing tactics to get you to buy. Truthfully, you’re not pulling a fast one over on them. These retailers know exactly how to make money and how to get you to buy more.
Here’s a simple principle: if you don’t have the money, you don’t need to buy it.
Don’t let money myths like this one sucker you in!
8. I can’t get a college degree without taking out student loans
College has become more and more expensive throughout the years. On average, tuition increases about 8% per year. This has led some to believe that it’s impossible to get a college degree without debt.
However, if you take debt off the table, you might surprise yourself. There are TONS of ways to go to college without taking on debt.
In some cases, it may take you longer to get through college. But if you work hard and work smart, you can find a way to pay for your undergrad.
And no, you don’t have to go to some prestigious out-of-state/private school to get a good education. Very few, if any, employers inquire about where you got your degree.
For more information, check out my article on How to Pay for College Without Student Loans.
9. I need to keep up appearances to my friends/neighbors
This is one of those money myths that has absolutely nothing to do with math. It has to do with your attitude.
You see, we as human beings have a major problem. We care way too much about what other people think.
But here’s another reality: very few people care about whether or not you have a BMW. And if they do, then you don’t really need to be friends with them anyway.
I once talked with someone who bought a nice car just to keep his coworkers from teasing him. As a result, he ended up with way more car than he could afford. He couldn’t keep up with the $698/month payment and the bank repossessed the car. Sounds great, right?
So, just do you. Learn to be content with what you have and what you can afford. If someone makes fun of you for it, that’s their problem.
10. I’ll never get rid of my debt
The money myth of all money myths! Once again, this has less to do with math than it does with your attitude.
This is where you have to make a commitment to do one of the most difficult things you’ll ever do: CHANGE!
Change is difficult for people. But without it, your circumstances will always stay the same.
Therefore, if you believe you’ll never get out of debt, you probably won’t. But if you decide to make the necessary sacrifices, you’ll go further than you ever believed you could.
So, if you’re in debt, what are you going to do about it? If you want things to change, you’re the one who’s going to do it. Nobody will change you for you.
Don’t Let These Money Myths Rule Over You
Don’t allow these money myths to take root in your heart. Instead, start working on a plan to take control of your finances.
To help you, I’ve written a 23-page eBook on how to get out of debt. In this eBook, you’ll learn step-by-step what it takes to discover financial freedom! You’ll learn the basics of budgeting, some tips on increasing your income, and how to get out of debt. I even include a section on what to do once you get out of debt! Just put in your email below and I’ll send it right to you!
Money myths are tough to overcome. But you can do this! The time for change is now!
So, are you ready to change? Are you ready to abandon money myths that will leave you broke? If so, now is the time to do it!
More Resources to Help You WinTry Audible and Get Two Free Audiobooks
Do you like to listen to audiobooks? My readers get TWO FREE AUDIOBOOKS when you start a free trial with Audible! Click the link above and get your two free audiobooks today! And yes, you can cancel before the free trial ends. Terms and conditions apply.
Speaking of audiobooks, one I strongly recommend (printed or audio) is Dave Ramsey’s Total Money Makeover! This is probably the best book out there on personal finances. Dave’s plan is the one I use and I couldn’t be happier!
Want to learn what it takes to become a millionaire? It may be more within your reach than you think! Learn how ordinary, everyday people became millionaires in Chris Hogan’s Everyday Millionaires!