There are a lot of misconceptions, dubious ideas, and outright falsehoods out there that are still believed in. This can be particularly true when it comes to money. Unfortunately, the most common false ideas about money can cause a lot of damage. That’s why it’s so important that no one believe the following five money myths.
1. Young people don’t need to worry about retirement.
It’s a reality: everyone has to prepare for retirement. While younger folks may have more years left until they stop working, this is actually more reason to start saving now, not less. Since invested money grows over time, starting saving for retirement early makes it much easier to be fully prepared.
2. Small expenses don’t matter.
This myth is easy to believe. After all, how much difference could it possibly make if someone spends $5 at a coffee shop every day? Well, as it turns out, quite a lot — since costs add up. That small daily expense sums up to more than $1800 over an entire year. Eliminating (or at least cutting back on) small but wasteful expenses like this can result in the reaping of some not-so-small savings.
3. A budget isn’t necessary.
Keeping a budget can seem like a monotonous and annoying task. However, a budget is an invaluable tool for keeping track of and controlling spending. People who don’t keep a monthly budget often have no idea where their money goes. Needless waste and a failure to save any money is the inevitable result. A budget allows individuals to assert control over their financial life.
4. Debt is always bad.
It’s not hard to see why this myth exists. It is certainly true that debt can be dangerous and that many people have wrecked their lives by going into debt. Nonetheless, debt can be very useful. Taking out a mortgage to buy a home is a great idea for those who are financially secure, for example. Even credit card debt is a good way to improve your credit score — just as long as the balance owed is paid off every month.
5. The stock market is too risky.
Yes, it is certainly true that stocks can go down as well as up. And yes, it is certainly true that major stock market crashes can and do occur. Even so, the stock market is still an awesome way to make money over the long run. That’s because, historically, the stock market has returned about 10% on investment on average each year. Investing in stocks is a good idea for almost everyone.
Money can ruin someone’s life — or make it. That’s why money myths might be more damaging than common myths in other areas of life. Learning to see through the most common money myths is simply crucial.
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