Twelve Crazy Myths of Personal Finance

You: Why twelve and not ten?

That’s how many there are.

Myth # 1: “I’d be able to save more money if I earned more money.”

False.  If you live paycheck to paycheck, it’s because of the decisions that you make, not the income that you make.  More than one in five of those earning $100K or more still live paycheck to paycheck. Do you think they expected to still be struggling on a six-figure income back when they made far less?  Me neither.

Important reading for the doubters:  Could you get by on half a million a year?

Myth # 2: “I have job security.  Besides, how bad can things really get?”

Bad enough you could use Toilet Paper As an Economic Indicator.

Myth # 3: “I’m going to get an inheritance.”

Even if your parents still love you, here are Five Reasons Not to Count on An Inheritance.

Myth 4: “I really need to watch those little expenses if I’m ever going to be able to save anything.”

No, you don’t.  First of all, Your Problem Isn’t Starbucks. Furthermore, obsessively saving isn’t fun.  To the contrary, there are more than Ten Ways to Save Money While Ruining Your Life. But that doesn’t mean you shouldn’t care about losing money if it’s money you don’t want to lose.  For example, these are my Top 10 Most Annoying Ways to Lose A Little Money.

Myth 5: “Saving money is as simple as picking up the phone.”

This one is almost right, since you can often lower your credit card interest rate and your cell phone bill by using the phone.  But you must dial the phone.  If you simply pick up the phone, it could be a telemarketer. Can a telemarketer save you money? No, as I got one of them to eventually admit.

Myth 6: “Having kids certainly won’t help me save.”

This is dead wrong. I say so despite the dangerous combination of my two ravenous daughters and my wife’s relentless focus on proper nutrition, which ultimately led to our conversation The 45-cent strawberry: Are organic foods worth it? But for every three-dollar gulp of blueberries they take, my kids save me money ten times over.  Whether it be playing on the swings or playing in the leaves, there are a numerous of ways Kids Save You Money.

Myth # 7:  “I need life insurance.”

You might need life insurance, but not just because Gary says so.  Before signing on the dotted line, make sure you ask the The Four Questions of Life Insurance.

Myth 8:  “I couldn’t possibly learn anything about money from a plane crash.”

Actually, based on the actions of both the crew and the passengers, there are several important financial Lessons from Flight 1549. (Flight 1549 was the one which landed without a single injury in the Hudson Rivera few months ago.)

Myth 9:  “There’s absolutely nothing wrong with using my credit card for everyday expenses as long as I pay off the full balance every month.”

While paying off your entire balance monthly is certainly much better than financing sliced cheese at 29% APY, the above statement is but one of the Top Five Lies We Tell Ourselves About Using Credit Card Usage.

Myth 10: “It must be a good financial product if it’s tied to a strong brand.”

Yeah, not so much.  For one thing, Gerber Life Insurance is not such a good idea. Want another example?  Upromise Underdelivers

Myth 11:  “I’ll save more later when I make much more money.”

That’s just but one of the Top 10 Excuses For Not Saving, an article where I also highlight the reason why each of those excuses, including the one about a higher income being your source to good financial habits, is simply lame.

Myth 12:  “There’s nothing funny about credit cards.”

I used to think that way too.  But not after I did the research for Credit Card Humor. Actually signing your name using symbols or mythical creatures just to see if anyone cares?  Better than most of what’s on TV.

Any other personal finance myths you’d care to add?  Bloggers, link away!  Also, if you like these kind of articles, be sure to follow me on Twitter.

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