You’ve been made to believe several money myths and these might be the reason why you’re struggling financially.
If you’ve read the article I wrote about money myths, then here are more money myths you might need to revisit.
It is better to own a house than rent
Who doesn’t want to own a house? It’s everyone’s dream!
We feel an added layer of security when we own one and we are guaranteed a place to stay as we age and retire.
Buying a house or renting is still a subject of most debates.
Which is wiser?
Most of us would prefer to buy a house. We think it’s a smart investment.
But is it really an investment?
Yes and no. Yes, if you’ll be engaging in buying and selling or if you’ll have your property rented out. No, if you’ll be living in it until it depreciates.
Does that mean you should no longer buy a house? Of course not.
If you are young, it is more advisable to rent. If you want financial flexibility and work accessibility, choose to rent.
Then save as much as you can until you can truly afford it. Because buying a house is an expense, not an investment.
Pay off debts first before creating an emergency fund
I was guilty! I thought I should pay off my debts first before anything else until I learned that I can always budget.
How can I save when I’m afraid of interests?
Think about it this way.
When you get sick or when your car or a home appliance breaks, do you have spare money? None. Because you failed to save on your emergency fund and you’ve exhausted your paycheck paying for bills and debts. So what option is left then? You’d be forced to take out another loan.
It can be a never-ending scenario. When can you finally settle all your debts?
Did I mention that budget? Budget is the key.
First, something for your savings and emergency fund.
Second, pay off your immediate and basic obligation. This includes utilities, rent, and groceries.
Third, pay other debts.
Evaluate debts. Which one has bigger interest rates? Are there flexible ones?
Savings need not be big immediately. Set only a reasonable amount.
Have something ready and at hand when needs arise.
Have your partner take charge of your finances alone
Usually, it’s the mom who is in charge of budgeting a family’s finances.
As husband and wife, both of you should be involved. Both of you should know the ins and out of your budget so that both of you know where the money is coming from and where it’s being spent.
A high salary means better finances
As your salary increases, so does your cost of living. The bigger the pay, the bigger the spending. Why? It’s because you know you can afford it.
Upgrading to a better car? Splashing out on extravagant meals?
Financial stability is not about the salary. It still depends on one’s attitude toward money.
The next time you’d be given a raise, resist the temptation to spend. Instead, start building equities.
You have to struggle to earn money
“Work smarter not just harder.”
There is no denying that people need to work hard to succeed but it is best to incorporate hard work with smart strategies and proper planning to reach goals.
One example is putting your money into investments. Do you know that the full potential of your money is maximized when put it into investments?
You might not need to render overtime or do several part-time jobs anymore. Take risks on stocks, bonds, and other financial instruments Make money work for you even at the comfort of your home.
People struggle to be wealthy because they think that taking jobs and working on it until retirement is the only way to make money. Rich people are the opposite. They take risks through business and investment choices. Both worked hard but the end results differ.
Are there things you need to change?
As you go through your financial journey, you’ll be able to create your own financial concepts and practices.
It is not bad to be influenced by old myths, but make sure that those myths will make you closer to reaching your financial goals.