When I moved out at 18 I had $1000 to my name and a pocket full of money lies I was falling trap to. I felt rich, filthy king like rich. I went and bought a TV, xbox, games, gun controllers and stuff to make it an awesome “Bachelor Pad”. I told myself that I was young, employed and didn’t have a care in the world. What I wish someone had mentioned was that bills that I wasn’t used to paying like rent, water, gas and electricity would come in every month, that I might not get that raise I expected, that I should look into savings and learn how to budget. Now I might not have listened and it’s even possible someone did mention all this and I didn’t listen. It got me broke and I had to borrow from my dad. Always embarrassing when it’s being irresponsible that gets your there. You know a lecture and another lecture after that is going to come. Actually, when I moved out I think the last lecture he gave me was about being responsible.
Apparently I didn’t listen too well and had to learn the hard way. I don’t regret the lessons learned but do wish I hadn’t believed some of these common money lies. We all buy into one or more. Sometimes consciously; sometimes totally unaware. In the end though, we pay the price.
My Finances will manage itself
Growing up I was never really interested in how my parents managed their cash flow. That changed quickly though when I moved out at 18 and was in debt by 19 because of the money lies I believed. Hard lesson but thankful it came at a young age. It taught me to be responsible and that my finances are my own. Any debt I take on I’ll have to pay off and if I don’t there goes my credit. Simply put, ignore your finances and you’ll get in debt. This leads to all sorts of headaches and handicaps in the future.
Banks and collectors always win
While it may seem like they do and that we are powerless the truth is that they must comply with the law. Our biggest defense is to know that if we’re managing our finances properly then they shouldn’t come knocking. And if they do we can prove that they’re wrong. They don’t always have their facts right. I’ve heard of cases where an incorrect debt amount went to a collection agency, who then sold it to another and the chain continued. The defendant did have to prove the amount was wrong but when they won it was worth it.
I must buy real estate: home, condo or even a piece of land for a tent
The American dream used to be to buy a home and have a white picket fence. Owning is considered better than renting. I’m not so sure anymore. The stats seem to swing one way or the other depending on how the economy is doing. Don’t let the temptation of a home force you into a bad financial decision.
I don’t need to start saving yet
This is an extremely dangerous lie. Your golden years will come faster than you think. After marriage, kids, mortgage or rent, college and the kids are out of the house you won’t have much time to save. The rule of compounding interest is to start early and save over time.
If I use my savings I’ll have time to replenish it
This lie is similar to the one above. If you’re tempted to pull your savings out then there is a slight possibility that you made a poor financial decision along the way. Spot the money lies, correct it and only if you must pull from your savings. But you’ll need to lock down your budget and start putting double the savings away after.
I need more experience before I start investing for retirement
In this day and age this can’t possibly be an excuse. Most employers have brokerage’s that will handle your 401k or IRA for you. They’ll even educate you if you want to learn. But the GUI’s and phone service are often enough to get you started. I wrote about IRA’s and Compounding Interest a few months ago in simple terms.
Everyone has a little credit card debt
This might be true. Others you know might have more debt than you. But is your standard those that are in debt or those that are debt free and their savings are increasing monthly. Which do you want to be? Along this line is the most famous of all money lies, Keeping up with the Jones’.
I got approved for a new credit card so it’s time to spend. If they approved me I must be responsible enough.
This one sounds great and you’ll have a lot of fun buying whatever it is you want. And the lender will be celebrating alongside with you. Don’t buy into this myth though. Remember that credit is a loan and you’ll have to pay it back on their (the lenders) time, not yours.
Spend now and I’ll figure out a way to pay it back. I’ll buy the fancy car now and worry about car payments and full coverage insurance later. I’ll buy more house than I can afford and hope for the raise. I’ll take out crazy amounts of student loans because I’m going to get a six figure job. These are all common money lies (mistakes) made leading up to the recession.
Blame the government and the 1%
This is a very popular route to go these days. Blame the government or blame the 1%. Truth is it isn’t their fault. We can be envious of the 1% but we must remember that their own hard work is what got them there. You may kid yourself that they inherited it or got lucky. The latter though created their own luck just like the rest of us can. The politicians come and go and blaming them for your misfortune will only hurt your finances in the long run.
Blame someone else
Is it family, girlfriend, friend or strangers fault? Blaming them is dangerous because you then don’t hold yourself accountable to get out of the gutter. Even if it is true you have to get back up and face the wind.
It’s on sale
There’s always a sale! Remember this and you won’t be so quick to spend. Many times I’ll see an item on sale that I want. But when I wait 30 days later I’ve already forgotten about it. Now if you’re being smart and really are waiting for something to go on sale, that’s a different story. This isn’t impulse shopping. But you have to be honest with yourself if it’s a need or a want.
I need it
This is similar to if it’s on sale. Do you need it now or did you need it before you saw it. Ask yourself. When I want something I’ll ask myself because it’s easy to talk yourself into needing something. And then it sits in the garage or man cave. There is impulse buying and planned shopping.
Credit is not my problem. My word is solid.
I used to actually think this and then I turned 13. I first learned that my word didn’t mean much in financial transactions. It wasn’t until I was 23 that I educated myself on how important credit is. When I got my car loan, mortgage, current job and phone plan they checked my credit score. Thankfully I started building it 9 years ago. The interest I’d be paying would be unimaginably higher if I didn’t have good credit.
Taxes? No Big Deal
Way too often I’ve seen people ignore the importance of filing taxes correctly and on time. Some try to take shortcuts this year thinking they’ll fix it in the future. Not a wise decision. With so many options for do-it-yourself tax software available there are no excuses to get it done right.
Have you bought into any of these money lies? Catch it now before you’re in a pinch and end up with nowhere to pitch your tent. If we can identify them now we stand a good chance of being wiser with our cash and having more in the bank.
1st Photo by Tax Credits
2nd Photo by Vectorportal