10 Lies We Tell Ourselves About Money

Lies We Tell Ourselves About Money – There are a variety of reasons why people do not manage their money effectively. A handful of the reasons are legitimate, but the most are merely thinly veiled excuses for not wanting to spend 10 minutes doing a little researching. Some people blame the educational system for failing to teach them about money.

And it’s common for people in their twenties to wish that their institutions had provided personal finance education. But guess what? Most colleges do. You simply did not accept them! The terrible reality is that you are not a helpless victim. You are in charge of your finances, and the sooner you realize this, the sooner you can start working on your finances.

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The first step is to admit some of the most common financial lies people tell themselves, so let’s take a look at some of them.

10 Lies We Tell Ourselves About Money

1. ‘I’m Never Going To Retire, So I Don’t Need To Save A Lot.’

So, you’re probably racking your head asking, why do people think this? And is it not wild that anyone would even think of not ever retiring?? Mind-blowing don’t you think? Well, some folks have worked for years with no savings to show for it, so it’s no wonder that most of them have ended up depressed. Others are youthful and have no idea that their potential to create income will deteriorate as they age. Some people genuinely enjoy their jobs and do not feel they will ever want to stop working.

However, they don’t contemplate the potential that they may not be physically capable of continuing to work. So how do you overcome this thinking? Before you roll your eyes and say it’s quite obvious, hear us out. Because we are all human beings who are fragile and prone to sickness, expecting that we would be able to work indefinitely is quite perilous. When you have little to no savings, and with deteriorating health, you will not only lose your income but will also incur a significant expense. The combination of those two would almost certainly knock us out of business.

Instead of assuming you’ll be able to work for the rest of your life, remember that a little money saved each month during your working life, which FYI you can begin right now, will grow into a lot of money over decades if it’s invested correctly. Rather than thinking of saving as a strategy to one-day stop working, think about the type of lifestyle you want to have and recognize that saving may be the only way to maintain it in the future.

2. The Desire to ‘Get Rich’ is Bad.

Obsessing over money and being greedy is appalling, but seeking a brighter future for yourself and your family is not. Therefore, you should find a balance between the two. Having extra money opens up a world of possibilities for you and others around you. You’ve heard this before and you will hear it a thousand more times in your life, becoming rich isn’t just about money; it’s also about having a rich life. This means different things to different individuals.

For some, it means having the financial resources to indulge in their passions. For others, it means having the means to hire a house cleaner once a week. Part of having a rich life for me is the ability to take a six-month break from my business to go on my honeymoon. So, what’s the solution? Consider what living a wealthy life means to you, and let that motivate you to take steps to increase your wealth.

3. ‘Investing is Too Risky — And Complicated.’

Why do people believe this? People tend to get intimidated about investing because they don’t always understand the terminology or the right questions to ask. After all, the publicity surrounding Ponzi schemes and individuals like Bernie Madoff (if you don’t know who this is, we recommend a quick google search) It’s because of these among a myriad of other factors, that people don’t want to be taken advantage of or make rash decisions.
So, to get around this, you first need to recognize that not investing at all is a big mistake because inflation erodes your purchasing power every year. A diverse portfolio with varying levels of risk and return potential should be included in your investing portfolio.

But it doesn’t have to be difficult: simply hunt for a bond and equity mix that fits your risk profile. And additional advice can be obtained from a financial professional. You should be open and honest about your time horizon and goals so that the advisor can help you locate something suitable. Think about it this way; big risks mean big rewards, and also closed mouths don’t get fed! Ok guys, if you’re enjoying the video so far, do me a favor and give this video a thumbs up. Thank you, and now let’s continue.

4. I Can Borrow From My Savings And Pay It Back Later.

I can’t exactly blame anyone for thinking this. It sounds kind of sensible, that is if you have, how do I say this gently, limited financial knowledge. When you have money in a bank account, it may seem sensible to take it out when you need it. But the reality is that catching up on savings is sometimes more difficult than it appears, and you’ll lose any money you would have earned in the interim.

So now that you know what you’re doing wrong, how do you deal with it? It’s quite difficult to catch up after you’ve fallen behind. If you don’t have a choice, accept that you’ll have to adjust your lifestyle to pay yourself back. To replenish your savings and stay on pace with your annual savings target, you’ll have to give up certain things. And if you’re in a pinch, borrowing from yourself is preferable to using a credit card. Just make sure you have a plan in place to replace any lost savings as soon as possible.

5. “I Don’t Have Enough to Invest”

Hear me and hear me, if you have enough money to go to Starbucks in the morning, you have enough money to invest. You have money to invest if you have money to spend on Netflix, new shoes, or a bottle of wine. What we choose to spend our money on is ultimately the key to financial independence. If you prioritize long-term savings over non-essential material purchases, you’ll discover that you have far more money to invest than you think.

People frequently overspend because they rationalize the acquisition of certain items they do not require. Splurging on items such as an expensive supper or even a pricey Caribbean vacation is usually accompanied by an explanation or justification such as you’ve worked hard this year, or that you need a reward. This is not to imply that you should never splurge or celebrate, but when it becomes a habit, it can seriously deplete your finances. You’ll be better off financially if you shift your mindset and instead pat yourself on the back for avoiding an impulse purchase.

6. ‘My credit score isn’t that important unless I’m buying a home.’

If the so-called American dream of homeownership isn’t your cup of tea, you may believe you can get away with not managing your credit score. However, your credit score isn’t simply used when you apply for a mortgage. Depending on how good your credit score is, it might save you or cost you a lot of money. How do you get around this you ask? Consider the possibility of your credit being reviewed at any time.

Manage your debt and bills sensibly, it’s a necessary component. Many landlords, for example, use your credit score when deciding whether or not to rent you a property, and utility companies frequently conduct credit checks before allowing you to register a household utility account. Before giving money for other forms of loans, such as personal loans, credit cards, and business loans, banks will look at your credit score. So, you can see how deeply intertwined our credit score is with your daily life.

7. ‘If I Ignore Those Debt Collectors, They’ll Go Away.’

Why do people think this? No really, why? When has ignoring a problem ever solved it? Some people may have convinced themselves that debt collectors are out of sight, out of mind. Or maybe they’ve determined that a life spent avoiding collection calls, is the way to go. Spoiler alert: it’s not! So, here’s the solution, face it. Debt collectors aren’t going away. Don’t panic if you find yourself in this circumstance; instead, be proactive. To begin, familiarize yourself with your rights, which may include disputing the debt, if necessary. Don’t be afraid to bargain, you may be able to work out a payment plan or have some of the debt forgiven if you pledge to pay it off by a specific date. If necessary, think through getting assistance from a credit counselor.

8. ‘I Can Depend On Social Security And Medicare When I’m Older.’

We tell ourselves this so we don’t have to save as much money when we’re younger and can spend more, yet the younger you are and the wealthier you are, the less likely you are to be able to rely on Social Security. Social Security was never intended to be a primary source of retirement income; rather, it was designed as a safety net. The typical Social Security benefit for retirees today is the same as a minimum wage job. pause for a minute and think that through.

Most Americans need around $2,500 to $4,000 per month to be genuinely self-sufficient in retirement. Many people can survive on less, but there isn’t much living. Current analyses of the Social Security trust show that it is underfunded. Something dire must be done to maintain the program beyond 2033, and recent speculation suggests that younger individuals may only be able to rely on 70% to 75% of their Social Security pay-outs. Does that sound like a solid long-term plan for anyone? So, save yourself early. Rather than relying on a system that is on the verge of collapse, start saving in employer-sponsored retirement plans with matching contributions whenever available, as well as IRAs for additional tax-efficient savings.

9. ‘I’ll Never Get Out Of Debt, So What’s Another Charge?’

Because we live in such a consumer-driven economy, resisting the temptation to spend is quite tough. Many of the folks you’ve likely dealt with over the years have used spending to make themselves feel better about their debt situation, virtually convincing themselves that they can handle it. You’ve probably done it as well. But such a mindset is like being at the bottom of a deep hole and claiming that the only way out is to dig the hole deeper.

The sheer irony of it is staggering! Rather than fooling yourself that you are powerless, recognize that you can modify your financial circumstances. It took a long time for you to go into debt, and it will take a long time for you to get out of debt. That’s just the reality of it. It is however feasible to become debt-free. And once you’re debt-free, you’ll be astonished at how nice it feels to be worry-free about your finances and not have to live paycheck to paycheck.

Concentrate your efforts on paying off one debt at a time, either the one with the highest interest rate, which will save you the most money in the long run, or the one with the smallest sum, which will be paid off the quickest. Then go to the next one, and so on, until they’re all paid off.

10. My Friends Earn Less Than Me, Yet They’re Still Able To Go On Four Vacations Every Year!”

This keeps almost half of the world’s population up at night so forgive yourself a bit for feeling this way. Your pals are either masters of Conscious Spending or completely clueless when it comes to money management. Consider how many times when you were a youngster, you heard one of your parents ask the other why they can’t go on trips like your neighbor, without fully understanding how their neighbor’s spending is broken down. They’re likely to be overspenders rather than deliberate spenders.

To put it another way, would you accept grammar lessons from a friend who failed his English 101 class? Hopefully, this is not the case. So why would you hold up your regular pals as role models, who make ordinary financial decisions and end up with ordinary outcomes (a.k.a. not having enough money)? The solution, refocus your financial goals and attempt to emulate people who make informed financial judgments. Don’t be like those who flaunt their wealth by spending more than they have. If you think they can’t afford it, you’re probably right.

RELATED: 11 Secrets On Money You Need To Know

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