How would you feel if someone told you that certain things you believed to be true were not true but lies that became true due to the continuous spread of information? You know how a story is widely known and repeatedly told that people begin to believe it as the truth. What if I told you that bats are not blind or sugar is not the cause of hyperactivity in children? Although, we believed these as kids while growing up. Efforts are made to debunk some, but how much of them can we debunk?. There are common financial myths people have believed to be the truth but are not. We are going to discuss them extensively below:
Not earning enough money to save:
People often believe that not earning enough money exempts them from saving. They often rely on the excuse that they don’t earn enough to take care of themselves, let alone save. The truth is that no matter how much one is remunerated, one can still save from it. It involves planning; planning makes all the work easier and makes you track all your financial expenses. It also helps you not to spend unnecessarily. Saving money should be a habit and can be formed when you start saving from the little you have before more comes. See our savings option.
Investing is only for wealthy people:
We often believe that investment is only for people that have enough money. When people think about investment, they think about rich people, which is not supposed to be. This notion comes from the fact that spare cash is ideal for investments. It is perceived that rich people have extra money and so can afford to invest. Notwithstanding, people that are not so rich can also afford to invest with their savings. It would be profitable if the reserved funds are used to create more wealth, instead of letting it sit pretty in a bank account and accumulating meager interests.
Too early to save for retirement:
The real question should be when is it too early or not too late to save for retirement? The answer should be no time. Saving for retirement is a necessity as it guarantees that life after working or old age is secured. Ideally, people should start saving for retirement immediately, they start working or in the latter part of their working years but, there are no manuals to these things. Nevertheless, it is crucial to do it the right way to maximize all the opportunities available on retirement. It is also pertinent to note that retirement is also a type of investment that pays and you would be grateful for in the long run.
Emergency funds are not necessary:
This is one financial myth people have embraced so hard. Nobody likes the idea that they have to set aside money for an incident they are not sure will happen. Nigerians, as religious as we are, carry the-blood-of-Jesus and, it-is-not-my-portion around as our emergency funds. Nobody likes emergencies and the liabilities that come with them, but it is necessary to be prepared at all times as emergencies don’t select who to visit. It is pertinent to set aside funds in case of emergencies to avoid being helpless.
Loans are bad:
People believe that taking loans is not good, but this is not true. Everybody at some point takes a loan to solve some personal issues. Looking at it, taking a loan in its entirety is not bad. It depends on the reason for taking the loan and its urgency. However, relying solely on loans to pay everything or even outstanding debts is where the problem lies. The key is knowing when to set boundaries (borrow what you can pay back) and doing it the right way. Like they say, too much of everything is not good. Know your level and stick to it.
Banks are the safest place to put money:
While it may seem safe to keep money in the bank considering that the funds are insured by the NDIC and not at risk of theft, it may not be safe with the constant inflation. You run the risk of losing more money than you gain. Banks may not offer much interest. For someone that would want to create wealth, it might not be favorable.
High income makes you wealthy:
Having a high income may not necessarily make you wealthy. Ever heard of the saying; more earnings equals more expenses which means that the higher your income, the higher your responsibilities. It can feel overwhelming, and perhaps you might feel the impulse to spend a lot because you earn more. This is where discipline comes in. It prevents you from spending more than you should.
The more money you have, the happier you will be:
People say that money can not buy happiness; I have not seen a more factual statement than that. You could have all the money in the world and not be happy. It also lays claim to the fact that money is not everything. As much as we are trying to make money and buy material things to live better lives, we should also focus on having things money can not buy. This includes peace of mind, the love of family, friendship, healthy social connections, etc.
Buying a house is better than renting:
We hear people say that buying a house is better than renting a home because it saves money. We also hear people say that people who rent houses are wasting money and that the money, be used to buy a house (mortgage). It is not always so because, most times, individuals might not have the resources to pay for mortgages. Owning a home comes with a lot of burdens people might not want to discuss. For an average-earning person, renting houses can be more economical than buying them if they live within their means. However, if you own a home, that makes one more addition to your assets.
Wills are for rich people and people with kids:
Having a will is necessary as it determines who you intend to pass on your assets to. Most people think that wills are only for rich people. No matter how small your properties are, somebody will inherit them. The purpose of your will is to make sure the right people are inheriting your properties. Imagine in a typical Nigerian local community setting where it is a norm that the brother of a man inherits his property when he dies, irrespective of the fact that he has a wife and children. Where would the wife and children start from? Hence, writing a will is necessary to secure the future of your immediate family.
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