Surely, you’ve heard your share of personal finance adages before. Consider sayings like “a penny saved is a penny earned” or all the people who swear that “buying a home is a great investment.” But just how true are those beliefs? One thing that we don’t always account for when it comes to money: Yes, there are some tried and true practices (take, for example something as simple as putting money aside for retirement savings or an emergency fund). However, some of the biggest money decisions that people make aren’t one-size-fits-all matters.
What I’m getting at here: Money myths abound. In its most basic definition, the word myth is something that’s not necessarily true and, to go a bit further, it might even seem to be ideal or desirable. But we all know that which is ideal or desirable isn’t always proven or effective.
A recent article by The Motley Fool, outlined “10 Egregiously Bad Personal Finance Myths.” The goal, according to writer Sean Williams, “to put these myths to rest for good.” The myths that Williams presents definitely belong in the “hackneyed” category of money thoughts. Included among the personal tidbits are such so-called gems, like:
- ” I don’t earn enough to save money.” Obviously, this statement isn’t a piece of advice, but it’s certainly a myth. Too many would-be savers excuse themselves from the discipline of putting money aside because they say their incomes are too low. But, writes Williams, “without a budget it can be nearly impossible to understand your cash flow and maximize your ability to save. If all Americans were working with budgets, chances are the vast majority would be able to save money, regardless of their income.”
- “A penny saved is a penny earned.” Williams declares that this 300-year-old saying (which originated with Benjamin Franklin) is bad advice because saving should never be about saving for saving’s sake. How you save your penny matters just as much (think: accruing interest and investments in the kind of assets where your money makes more money).
To read the other eight myths that Sean Williams debunks, check out his piece on The Motley Fool website at fool.com.