A money myth is any belief about money that is based on misinterpreted facts or beliefs, something that only applies in a specific country, or an actual lie intended to mislead people.
Regardless of the myth’s origins or the circumstances surrounding it, it is critical to recognize it for what it is: incorrect information. There are many misconceptions about money, ranging from earning to spending to saving. These money myths are mostly false, and their importance cannot be overstated because they influence how we view money and how we perceive others who have money.
In the worst-case scenario, these myths can prevent us from developing a positive relationship with money. Some of these myths include:
Myth 1: You must have a lot of money before you can save.
This is the most ridiculous and widespread of all money myths. This myth has discouraged many people from saving and even investing. This is simply because they believe they must have a large amount of money before beginning to save.
Start saving now, no matter how small, because if you can’t save with what you have or earn, chances are you won’t save even if you have or make a lot of money.
Myth 2: The higher the risk, the greater the reward.
When it comes to money and investments, this is a common misconception. This myth is false because every type of investment, no matter how small, contains an element of risk, but not all risks produce returns.
However, it is not the risk that produces the reward, as some low-risk investments produce high returns and rewards. As a result, believing that an investment must be extremely risky in order to produce results is incorrect.
Myth 3: To invest, you must be wealthy
Many people believe that those with a lot of money are the only ones who invest, And this myth has narrowed people’s perspectives on investments. People believe that only the wealthy invest because they have a lot of money.
This myth is false because you do not need a large sum of money to begin investing. This is due to the fact that there are investment opportunities with the lowest minimum investment amounts and daily compounded interest. You can start small and withdraw your money at any time while still earning interest with these types of investment opportunities.
The truth is that if you do not start to invest with the little you have, you might find it difficult to do so when you have so much money. Bottom line, it is way easier to start with what you have and remain consistent than waiting for the huge capital you might never get in a long while.
Myth 4 : “More money equals more happiness.”
Many beliefs are intertwined with the desire to amass more wealth, including the myth that having a lot of money will make us happy.
The truth is that having enough resources to cover our basic needs is critical, but being wealthy does not imply being happier.
Having a lot of money can be very isolating.
Furthermore, there is evidence that people who prioritize wealth maximization are less happy than those who prioritize relationships and experiences.
Myth 5: Avoid using credit cards.
Making purchases with credit can be beneficial as long as you pay off your card balance in full each month to avoid interest.
A rewards program is available on many credit cards.
If you use your card for all of your everyday purchases, you could quickly accumulate points that you can redeem for cash, travel, electronics, or investments.
Furthermore, demonstrating responsible credit usage can help you raise your credit score, making it easier to buy a car or a home later on.
It may even earn you a lower interest rate in the future if you borrow.
It can be difficult to get out of credit card debt, but if you control your spending and pay the card on time, you will be able to do so.
Myth 6: Savings accounts are required.
Let’s be honest, We keep dipping into our savings account for various reasons, including “important” ones like the new phone. Expenses have a habit of eating up everything that is readily available, including your savings account. Is it really a saving if we are the rare person who keeps money in FDs and does not “break” them? With inflation higher than returns, we are effectively exchanging any real returns for “safety.” For example, with the FD rate currently hovering around 5% and consumer inflation hovering around 6%, we are losing purchasing power. As a result, it is critical to invest money in addition to saving money.
Myth 7: It’s too early or too late to start saving for retirement.
People frequently believe that it is too late to save or invest for retirement. This is incorrect. This is because it is never too early or too late to begin saving for or investing for your retirement. Those who believe it is too soon believe they have all the time in the world, which is untrue because most people reach the pinnacle of their earnings in their early years.
If, on the other hand, you believe it is too late to begin saving for retirement, it simply means that you are unaware that there are ways to still put money aside for retirement by investing in certain assets that provide returns.