We all make mistakes now and then, especially where money is concerned. We spend too much on takeout food, buy into frivolous trends, and apply for loans we really shouldn’t have. These errors in judgment are mostly our own fault, but many other money mistakes might not be. The world of personal finance, after all, is swarming with misinformation and unreliable old wives’ tales. With that in mind, here are six costly money myths that you need to forget.
1. Quality Products Cost More
Although it would be helpful if you did, you don’t always get what you pay for. Sometimes, you can spend a lot less for a better quality product, while other times spending more benefits you in no way. A good example of this would be generic drugs and medications. When you splash out on branded medicine, you only really pay for the colourful packaging, as the drugs are the same.
2. Two Paychecks Are Better
We live in an expensive time, so having two paychecks coming into the house can seem like a good idea. However, there is a chance that having both you and your partner working could cost you more than you earn. If you have children to take care of and a long commute ahead of you, most, if not all, of that extra income would have to cover any childcare and travel expenses.
3. Debt Should Be Avoided
Debt isn’t the monster that many people believe it to be. While the Swedes call loaning money “låna pengar”, most other countries call it a mistake. However, that doesn’t change the fact that, when used wisely, debt can be a helpful tool. Not only do credit cards offer better protection than paying cash, but taking out a loan and paying it off will also improve your credit history and score.
4. Renting Property Is Wasteful
When renting a home, you don’t get to keep the property. This has led many people to think that renting is more wasteful than buying. The truth is, the decision whether to rent or buy should depend on your circumstances. If you move around a lot, have just started a new career, or are just beginning to plan your future, then renting allows you the freedom that you need.
5. Only Wealthy People Invest
Investing is so much more than diamonds, gold bars, and stocks. While it may be a habit common among millionaires, there’s no reason why only the most wealthy of us should be able to invest. Investment opportunities might be limited by your income, but there are plenty out there, even for those with little capital. You just need to research to find the right one for you.
6. Mother Knows What’s Best
A lot of what we learn throughout our lives comes from our parents. They begin to teach us from the very moment that we’re born. As well as helping us to walk and showing us how to ride bikes, most parents want to offer advice about money. Unfortunately, times have changed a lot since your parents were young. This means that you should take their words with a pinch of salt.