When it comes to money, there is always going to be disagreements on what the best and the worst ways to acquire wealth are. Clearly, when you think about money, it’s obvious our relationship with money affects how much of it we have.
Many of us see money in one particular way, and the truth is many of you are telling yourself lies about money and what it’s doing for you.
With 80% of Americans having some form of debt, it’s clear that many of us live beyond our means. However, 70% of people also deem it necessary in their lives.
The question to ask is how many of these lies we tell ourselves about money are true? And how many of these lies do you tell yourself?
This article will uncover 12 of the biggest lies we tell ourselves about money.
Let’s get started.
1. I Don’t Need to Worry About My Credit Score
A common lie that many of us tell ourselves about money is that we don’t need to worry about our credit score until we need to buy a car, a house or get a loan. The thing to remember is that by the time you get around to needing those things, it may be too late to build your credit score.
It’s not important to check your credit score every week, but you should at least review and check in on it yearly. The things you want to look out for are suspicious activities and inaccurate reports of late payments.
Solving these errors in your report can boost your credit score quickly and make a big difference to the interest rates offered by your bank.
2. I Have Time to Save for Retirement
When you are young, you think you always have plenty of time to save and plan for your retirement. Waiting to start saving for retirement can make a drastic difference to how much money can accumulate for when you’re unable to work.
For example, the difference between five years might not seem like much, but it can make a big difference. A 30-year-old investing 10% of his salary on a $50,000 a year salary could be looking at $1.1 million by the age of 67, accounting for a 6% return and a salary increase of around 1.5%.
If you started at 25, you’d instead have $1.7 million or if you waited till 35, $700,000.
As you can see the difference in just a few years can make a big difference for your retirement plans.
3. I Won’t Be Able to Pay off My Existing Debt
Sometimes when you are looking at your budget, it can feel like putting extra money towards paying off your debt is a wasted effort. Remember always to feel good about the little wins.
When considering which debt to pay off first think about paying off the highest interest rate first.
You can also consider changing over to a credit card that offers 0% interest rates, just watch out for transfer fees and always consider the worst case scenario.
4. the Bank Is the Best Place for My Money
Many of us believe that the bank is the best place to keep our cash. You don’t place it into investments, as you want access to your money.
A lot of people put their money into low-interest savings accounts. The trouble with this is if you’re earning next to nothing in interest you are going to be losing money because of inflation.
With the average savings account balance sitting at $5200, there are a lot of people who could be making their money work much harder for them.
5. If I Borrow Money from My Savings, I’ll Pay It Back
How many times have you told yourself this little white lie? Consider this, if you have to tap into your savings to make a purchase because you don’t have the money to buy something outright, can you really afford it?
Remember if you can’t afford it now, the chances are you won’t be able to put the cash back into your savings in the future.
6. I’ll Start Investing Next Year
Many of us believe that building wealth is something that only the wealthy can do. In reality, anybody can start investing and you don’t need to wait until you have ‘more money’ to begin investing.
Instead of considering on investing with a set amount of money, do percentage-based investing instead. Agree with yourself to invest a certain percentage of your salary every month.
There can be uncertainty with investing in markets going up and down. Investing periodically rather than in one large lump sum gives you the best chance of avoiding any sudden drops in price.
7. I’ll Need Less Money When I’m Older, Social Security Will Support Me
The idea that you’ll need less money when you are older is a myth that many of us tell ourselves. The truth is, you’ll no doubt need more money when you are older.
Even if you reach retirement debt free and even have your own house, there are still a lot of unexpected expenses that you can encounter. Some big unexpected costs that catch people out in retirement are:
- Repairs on housing
- Helping out family members in financial problems
- Taxes rising
- Living longer than you thought
Social security alone will often not be enough to support you in times of need, consider investing in your 401k or setting up extra IRA payments leading up to your retirement.
8. I’d Rather Have Money Saved Than Pay off Credit Card Debt
Many of us when receiving large inheritances sometimes hate the idea of paying off debt with our inheritance. We’d rather see a big stack of money that we can access than balancing the books.
While it may make you feel better, you’re costing yourself a lot of money as interest on your savings will be low compared to the interest accumulating on your debt.
It’s good to keep an emergency deposit of cash-free just in case you need to make a big purchase, but minimizing the amount of debt you are paying is a great idea.
9. I Will Never Be Rich
When we think about money, many of us feel like it’ll take a lifetime to build up any substantial savings. This can lead to putting people off the idea of saving in the first place.
Remember that saving isn’t so much about money making you rich, it’s about money giving you financial stability and freedom. With every single deposit you make towards your savings you gain more security and freedom.
10. I Can’t Afford to Invest
A limiting belief many of us set ourselves about money is that we can’t afford to invest. The truth is every single person can afford to invest; it’s not limited to only the very wealthy. Sadly though only 54% of Americans invest at all.
If you can afford to go for lunch, you can afford to invest. Investing simply is how you choose to spend your money, should you buy material possessions that you may only want and not need, or should you invest your money? The choice is up to you.
11. I Don’t Need to Think About the Future Just yet
The future is, well, in the future, why would you worry about it now? In an ideal world, you’d be both financially secure now, and in the future. Unfortunately, if you don’t think about money planning now, that future self may not be as secure as you would like.
People who live in the now will often look to find immediate rewards as opposed to rewards in the future. This means that in the future you could be in a position that you didn’t intend.
Think about planning for what financial goals you’d like to accomplish in the future and reverse engineer how you would need to get there. Even breaking your goals down into monthly or weekly saving goals can make those unrealistic figures suddenly seem a lot more achievable.
12. I Don’t Earn Enough Money
Finally, the biggest lie we tell ourselves about money is that we don’t make enough money. You should remember that you don’t need to be banking a six-figure salary to pay off your debt or put money to the side for savings.
Remember that as your earnings increase, you live to your means and your spending will tend to increase too. One of the best ways to look at your earnings is to consider where your money leaks are.
Are you paying over the odds for an expensive gym package you hardly use? You can also try reducing temptation by deleting saved credit card details from websites like Amazon to halt any unnecessary spending.
Do You Tell Yourself Any of These Common Lies About Money?
When we think about money, we often don’t see the ‘truths’ we tell ourselves as lies. Realising the real truth and adjusting accordingly can be the biggest move you can make to creating real wealth in your life.