It’s virtually impossible to not deal with money in today’s society – we rely on it to survive. You’ve got to use it to pay for food, shelter and other daily living expenses. How you think about money is important. If you’ve ever heard the following three myths about money, you may want to reconsider them.
Money Is Everything
Benjamin Franklin once said, “Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants.” These are important words to think about and reflect on.
If you’re a person who strives to make money, you likely do this so you can pay your bills or purchase services or material items you find appealing. There’s nothing wrong with having this attitude and conviction as it allows you to have financial freedom and make choices about the services or goods that money allows you to access.
If you have money, does this make you a better person? Probably not. In fact, in some people, it makes them worse. You don’t want to get into the trap of making money and then wanting to make more and more. While it’s important to have enough money to live on and save for unexpected emergencies, it’s also important to have traits such as being consistent and a collaborator and have integrity. This will make you a better person more than having a bunch of money.
Borrowing Money Is Bad
Another financial myth surrounds the negative connotation around borrowing money. Borrowing money is a common part of living. You may find yourself borrowing if you take out a mortgage loan for a new home, secure online installment loans from direct lenders, or leverage a car loan for a new vehicle. As long as you use the money you borrow responsibly and make your payments on time, borrowing money doesn’t have to be seen as all bad. Note that short-term loans should be considered only for times of unexpected personal emergencies.
In most cases, when you borrow money from a lender, they will look at your current debt, credit background, employment, and other factors to determine how much they might lend you. This is common when you are purchasing a home. A mortgage lender will examine the monthly expenses you’re required to pay each month and see if you will also be able to afford to repay the loan amount. They will also look to see if you have any outstanding debts. A lender wants to get paid back so they do their best to make sure you can afford an extra payment each month.
Saving is Better than Investing
While saving money is important, it doesn’t mean you shouldn’t invest as well. The main benefit of saving your money is that it can be helpful in case an emergency occurs and you need cash quickly. Saving money can also show you the power of compounding as your savings will grow larger if you have it in an interest-bearing account. While this can be helpful in the future, there is a disadvantage as you probably won’t be able to receive the same amount of return that you can by investing. If you only rely on saving money, inflation may eat away your savings over the long term, which can prevent you from reaching any retirement goals you may have.
By investing, you can usually gain more returns for your principal than you can with a savings account. If you choose the right investments, it can act as a great defense against rising inflation. Investments can help you multiply your cash holdings and give you the ability to create a comfortable retirement when you want to take it easy in the future. However, investing does come with higher volatility and price fluctuations. It’s important to do your research and invest in a sound strategy.
When you think about money as a way for you to generate freedom and live the way you want, it can free you from getting too attached to it. There’s a fine balance with money that can be found when you have a plan and follow it.