There are countless blogs and articles and posts about the spending myths everybody should avoid. But, no one talks of the saving legends. Yes, the latter may sound insignificant – how risky can it be? – yet they are incredibly dangerous. These folklores encourage ordinary people without much money to follow the status quo. As a result, the majority of hard-working, working-class men and women continue to live from paycheck to paycheck.
Sure, there may be a little extra each month, but not enough to stop you from looking over your shoulder. To provide breathing space, it’s essential to understand the myths and why they are baloney.
A Penny Saved Is A Penny Earned
Although it’s true saving is an excellent way to manage your money, this motto isn’t true. The richest people on the planet didn’t stash hundreds of millions away each year in a bid to boost their wealth. Instead, they increased their earning potential and speculated to accumulate their cash reserves. And, you should do the same where possible. Rather than putting money in an account with little to no interest, try investing instead. A low-risk, medium yield portfolio will keep the funds ticking over without much risk.
Stick To What You Know
If investing is a form of saving money, it’s important to recognize the myths in the industry. Chief among them is pumping money into the sectors you understand. Then, there won’t be a knowledge gap and your risk levels will decrease. The problem with this is that there is no diversity in your portfolio. Every project is the same or is related, which means one drop can wipe out all of your savings. The key is to ensure there is enough flexibility in case of a bad day on the stock exchange. A broker should be able to point you in the right direction.
Credit Cards Are Dangerous
You are better of saving, people say, as spending is a minefield. Use a credit card and don’t pay it back and you will suffocate under a mountain of debt. While this is possible, it isn’t the case for the majority of practical card users. All you need to do is remember to pay off the balance each month. Then, you get the benefits of credit card usage which include everything from cash back to insurance. With a piece of plastic, it’s possible to earn money while spending and to protect your purchases. If you do have an overdue balance, switch to a 0% interest card.
Cheaper Is Better
When you spend less money on products and services, you save money and can use it elsewhere. The logic sounds solid yet it’s not because cheap items aren’t well manufactured. As a result, they break more quickly than the expensive ones and you are forced to replace them, spending extra in the process. In this case, it’s wiser to pay more initially to save money in the long-term.
Do you invest in any of these myths? Are you ready to switch up for the sake of your finances?
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