The 4 Financial Lies Everyone Falls For
With so much information being slung around these days, how do you know what information is good or bad? I can’t tell you how many times I have watched a study on the news telling me that eating a certain food would help me lose weight and increase my immune system, and then the following week another study showed the same food caused cancer.
The same can be said about financial advice. If you ask ten people their advice on finances, you will probably get a number of different answers. I am not a professional financial planner. I am an everyday, average Joe, personal finance guy that researches topics so I can stay on top of things and know what the heck I am doing.
In my journeys, I have come across some financial ideas that may not hold much water. You know what they say about opinions, and on that note I will continue.
1. Only Rich People Can Invest
So you think you have to drive a fancy car, wear a custom tailored suit, and have a six-figure income to invest your money?
Even people like me, who drive fuel-efficient cars and ear off-the-rack clothing can invest some money. It doesn’t take a boatload of money to begin investing and you don’t have to keep your nose to the grindstone researching companies and funds every minute of the day. So many apps exist these days that make it incredibly easy for you to invest with very little money and they do most of the work.
2. Buy Everything With Cash
Cash is great, as a matter of fact, some people would say that cash is king. As a matter of fact, paying for most things in cash is not a bad idea, but paying for everything in cash leaves you very little or no recourse if something goes wrong with the purchase.
One of the nice features of credit cards is that they have policies in place for such things as travel protection, additional insurance, and extended warranties.
3. Two Incomes Are Better Than One
We grew up thinking that if one of something was good, then two of something must be better. It is human nature. In most cases, this is the truth. I’m not going to lie, it can be the case with two incomes as well, but you have to be careful.
If you and your spouse both bring in an income and you have a child that requires child care, you may want to weigh the cost of child care against one of the incomes to see if it is worth one parent staying at home.
Often times, when you begin to bring in two incomes, you believe you can spend more because you are bringing in more money. This basically negates the additional income and you are right back where you began.
4. I Will Just Use My Credit Cards In An Emergency
Whoa! If it is a true emergency, like losing your job, it could take 4 months or more to find a new one. Do you know what kind of bills you can rack up in 4 months? Figure out your monthly bills and multiply them by 4 and then add a little bit on to that for incidentals.
A credit card is okay for a one-time emergency, but you should definitely have a dedicated emergency fund set up. This emergency fund should have at least six-months of living expenses set aside just in case the worst should happen.
These are just a handful of some of the ideas I have come across over the years. I would love to see you add yours in the comments and hopefully we could build upon this list.