We all deal with myths or perceptions which we sincerely believe but actually aren't true. Some of these money myths we learned even from childhold. And it's no exaggeration to say the ideas in our minds - spoken or not - drive our handling of money as adults.
One myth is the "get rich quick" idea. This could be playing the lottery, buying into some late-night informercial promising quick and easy money, or investing speculatively in the stock market.
Getting rich slow is boring to some people, but it's the safest and most stable way to build wealth over a lifetime. Small investments on a regular schedule over a long period of time is the only time-tested way, and even then it is not guaranteed. It's okay to buy a lottery ticket or invest in a high-growth, high-risk stock - as long as it's a small amount compared to your overall plan, and you really can afford to lose that amount.
A second myth is using credit to live beyond your means. No one plans to do this, but one thing leads to another, and soon the credit card is the tool to finance a lifestyle which we cannot afford. For some people this is a way of life. But the outward appearance is just a shell, and credit is covering the difference between income and expense. This way of life is especially appealing because others will compliment you on getting a new car or a nicer house. It's very hard to resist that appeal.
Another pitfall not based on reality is the urge to keep up with our peers. This is the "keeping up with the Joneses" myth. We do feel pressure to show our success compared to those around us. It takes a strong will to resist the pull to buy more when there are so many ways to get what we want now.
A fifth myth is the "head in the sand" approach to personal finance. Most people don't like it, don't want to learn about it, would rather watch television than study finance. It's okay to trust your instincts if your plan is based on knowledge. But if not, then you can get in a hard situation simply relying on your intuition.
So what can you do?
1. Commit to educate yourself, just for the basics. Find a method that suits your lifestyle and preferred method of learning.
2. Decide to live within your means and resist the desire to match the outward signs of success you see in your peers. This is hard, but it's likely than some of most of those around you are also stretched thin or living on credit.
3. Personal finance is not magic. It follows the same principles that we will see all around us: nothing comes easy, good things take time, there is no sudden path to riches, etc. We should be just as balanced in our expectations for wealth building as we are at the gym, at school, at work.
4. Settle on just the basics: do a budget, work to get expenses down to just below income, invest in an index fund unless you area close to retirement - that's it. You can do just fine with just those basics.
Disclaimer: The views expressed on this website reflect the personal opinions and experiences of the writer. Nothing in this article constitutes financial advice in any way. Information on this website should not be relied upon for investment or business advice. Please consult with a qualified financial professional before making any financial decisions. 3805012