What’s your perspective?
Everybody have money myths that they may have adopted from their parents or grandparents. Forming the right attitude towards your money and your view of what appears to be true or false about money, matters. These are some money myths that you may be familiar with:
1) A penny saved is a penny earned – What’s your perspective? Is a penny really earned when it’s saved? Now-a-days putting your money in the bank is symbolic to stuffing your money in a mattress in the old days; there is hardly any interest gained. However, it is safer than stuffing money in your mattress right? Or is it?
The real key to wealth is not hoping and praying to accumulate wealth from the miniscule amount of interest in a savings account or your job. However, one of the most important keys to wealth is a mindset. Are you focused more on how little money you have than using your creative mind to find a need and fill it/solve that problem? Regretfully, unless you do more than spend and invest wisely, becoming wealthy will be a fleeting thought. If you make $50k per year, your savings are not likely to increase much, even if you saved all of your loose change. A shortage of income doesn’t change by focusing on it, however, adding to it with a second job or starting a business will. In short, trading time for dollars does not create a large nest egg.
In order for your penny to earn more, the solution is to generate more income through upgrading your job or starting a business. Can this happen overnight? It is possible with an innovative idea, at the right time.
2) A home is a good investment – What’s your perspective? Is a home a good investment? My view is that owning a home is better than renting. Before you answer yes, what would your answer have been during the sub-prime lending debacle if you were a homeowner that underwent foreclosure or short-sales? Perhaps you are still trying to recover the loss in value of your home due to short-sales in your neighborhood or other comparables in your area.
Some people look at homeownership as a foolproof investment. Although it seems that the market is bouncing back, the property taxes are increasing in some areas. Be aware that the slightest market crash can literally shake the foundation of your “Investment”. No pun intended. The more you borrow, the greater the risk.
Some home buyers ask, should they get aggressive with paying off their mortgage? My view is that if you have purchased your dream home that you will retire in, absolutely. Paying it off could give you a piece of mind. Otherwise, consult a trusted financial adviser regarding a smart way to invest the excess money being applied to your mortgage, elsewhere. Tying your money up in a home that you will eventually sell is not a smart money move.
3) Paying cash for everything is best – Is cash king? What’s your perspective?
Paying for purchases with cash or debit card is always a good strategy, right? What’s your perspective? My view is yes; it’s a great metric for monitoring your spending. Once your cash has been spent, that’s it. A person is less likely to overspend while using cash or debit card. Contrary to my view, some experts touts the rewards that some people earn with low-interest rate credit cards.
Credit cards can become a disadvantage for those that are not yet disciplined with managing their finances. The key strategy is to pay off the card each month. Be careful with taking the credit card option above cash or debit, if your behaviors are still being improved. What’s your perspective?
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