Money rules are everywhere but not all of them will work for everyone. The best financial habits for hard and fast money are those that work for you, and are tailored to your income and requirements. It can be easy to get lost in all the ways we should handle our money. Take a new route this year and let these money myths go.
It is not worth saving a small amount
What if you are able to save only a small amount? Many of us have felt stressed by the uncertainty and unpredictability of the past year. It can seem futile to save money in these times, especially when inflation continues to eat away at our dollar value. It is more important than how much money you save that you actually make a habit of structuring your finances and putting it towards your financial goals.
Automating your savings is the best way to go. Even if it’s the smallest amount you can live with paycheck to paycheck, flexing that savings muscle is an important habit. As times improve financially, you can easily adjust the amount, but money habits matter—and every little bit helps!
To start investing, you need to have a lot of financial savvy
Investing is now easier than ever. There are many tools that can help you start your investing journey. These include robo-advisers that can help you find the right products for you, as well as personal wealth managers who can help you create a plan. Many of us start by simply hopping on the 401 (k) savings ladder and looking into the financial tools offered by our employers.
If you’re a first-time investor, there are a lot of tools to get started and understand both the risks and opportunities. It’s important to remember that anything you invest is much different from savings and that losing even your initial investment is possible.
I’m So Young, I Don’t Need to Think About Retirement
Are you earning income? Then it’s a perfect time to think about retirement! It’s true that the sooner you start thinking about your retirement years, the better. This magic of compound interests means that your money can earn even more money over a long period of time. The longer you give yourself to allow that retirement amount to grow, the better.
It’s okay to start small. You can make regular contributions to retirement funds that suit your financial situation. This is a great way to set yourself up for financial success.
I Don’t Need a Will or Insurance
Sometimes, insurance policies and wills can be left out of our financial plan. And if we don’t have children or dependents, these things can seem unnecessary. But it’s great financial hygiene to take stock of if these additional financial tools are important for you or your family. This could include determining if life insurance is necessary for you or your partner, as well as determining if other insurance options are available that can help protect you in the event you lose, die, or steal certain assets.
You may want to ensure that your home can be sold if your partner dies. You may also want to know that resources and a care plan are in place for your beloved pet. These guidelines can be established much earlier in life than we might think. This will give you peace of mind and help you to care for your pet.
All Debts are Bad
Debt is a pretty emotionally charged topic in our culture, and it can be really easy to slip into the mindset that all debt is “bad.” That can make it really easy to internalize that value judgment for ourselves and think that if we have debt, we must be bad with money. Debt is far more complex than people think. Yes, you should be careful with high-interest credit card debt and live within your means. However, there are times when you may need to leverage credit to make the decisions and take the necessary steps to achieve larger goals.
Loans can be helpful financial resources, such as loans to finance a well-planned home purchase or to support the goal of going back-to-school. Even certain credit cards—if used responsibly and paid off every month—can deliver valuable perks around travel and certain retailers, depending on your lifestyle. Few of us will ever find ourselves in a position to pay cash for a house, school, or any other major purchase that could impact many aspects of our lives. Debt discretion is a better habit than debt villainization.
Never accept a pay cut
Sometimes, making a major career or personal change can mean taking a pay reduction. Although it is common to believe that you should not drop down the pay ladder when moving, there are many reasons you should be open to making less.
Are you ready to make a career change and enter a new industry? This might mean quitting a job that paid more. Would you prefer to work less hours and have more time for your family, hobbies, or passions? Rethinking your financial expectations could be worth it. It’s important to know that first, position compensation is a lot more than just your salary, and there are plenty more important life considerations than just how much your paycheck is.
Renting is better than buying a home
One of the most glamorous aspects of adulting is home ownership. But the truth is, it’s a complex decision with a lot of different variables. When you’re considering buying a home, it’s important to think of the full list of costs and commitments that come along with that choice. You may need to budget for repairs, homeowner’s fees in some communities, as well as insurance and principle payments.
You can also make your life more secure by owning a home. It is an investment and a place that feels different to renting. If you’re in a life stage where careers and connections feel in flux, a home purchase may complicate your ability to relocate to a new chapter. There are a million ways to make a rental feel like your forever home. It doesn’t necessarily mean that you have to purchase a home.
Source: The Every Girl