I’ve been busy lately. Instead of sitting in front of my computer waiting for the same email (more likely spam) to come through, I’ve been calling, asking and searching. During the last couple of weeks, I:
- Asked my car insurance agent to price match an insurance policy that I found online.
- Call my Internet service provider to extend my new customer discount.
- Went to get a free piece of chicken from KFC.
Frugal Living is Easy, Not
Most of these types of posts usually have people bragging about how much money they saved and how you can too if you follow the steps they outlined. They make it sound so simple but it’s almost always misleading. It took a while to search and compare all the insurance policies available, to wait on the phone to find a customer service rep for the Internet service provider, and to be in a room full of people at KFC (actually, it was quite fun seeing so many people but anyway…). Instead, I could be spending time golfing, being with my family, or reading a book.
Let’s be clear. Saving money, or more broadly, taking action, isn’t easy and takes quite a bit of work. If you feel like you can always save later when you need to because it’ll be a quick phone call away, then you are mistaken and will get discouraged when you actually need to do it.
I still remember talking to people a few months ago when they just lost their job and needed to reduce expenses in a hurry. A few of them could easily knock $50 a month off their Internet service costs, but the lines were so jammed they just couldn’t get through.
How you think of money can have a huge impact on your financial future. And there are many myths out there that don’t do us any favors. Here are 11 that could be keeping you from the promised land.
Money Mindset Myth #1 – A Penny Saved Is A Penny Earned
Not losing that penny by saving it is helpful, but creating meaningful wealth takes so much more than not giving that penny to the cashier. In addition to saving, you must also multiply those cents you’re saving to truly feel the effects. Even if the adage is accurate, it’s also incomplete, and certainly not something you can base your future fortune around.
Saving pennies is good, but you also need to earn more money.
Money Mindset Myth #2 – I Don’t Need Money Help
Paying for people to coach you in precision pilates is a want, but paying for financial help may be a need. If you have zero experience straightening your finances, then going it solo will absolutely hinder your growth.
Investing in a money coach will lead you down a safer road lined with superior choices, better decisions, and ultimately, a finish line you’d probably never reach alone.
Invest in a coach and train for financial success.
Money Mindset Myth #3 – Budgeting Saves Me Money
As noble as that might be, it isn’t accurate. Write down everything you earn, subtract everything you spend, and allot a certain amount towards savings. Then you’re golden, right?
No, not really. You can record your pluses and minuses all day, but if you’re not acting based on those numbers, then your budget means nothing.
Carefully plot and plan, then follow through on your budget to see optimum success.
Money Mindset Myth #4 – If I Earn More, I Can Spend More
You worked 60 hours last week. Dog tired, you come home and collapsed into bed. The exhaustion is fine; at least your paycheck will be fat.
When it’s time to reap the rewards, you happily head out with your paycheck in hand, to shop.
“Look at all this overtime! I deserve a ‘little’ something for working so hard!”
That’s why you’ll stay right where you are in your finances.
That “little” something extra is called overtime pay, and THAT is your reward. Stick all your “extra” earnings in a special fund or savings account, then leave it there and watch it grow, rather than disappear.
Money Mindset Myth #5 – If I Don’t Risk It, I Can’t Lose It
Playing a smart financial game means taking intelligent risks. You’ll never make a mint if you don’t make smart investments. Fail to take SMART risks with your money, and you’ll keep the blooms from blossoming on the branches of your money tree.
Stock valuations are volatile, but individual investors can still profit on the expansion of the economy by buying into a broadly diversified index fund that tracks the total market — as long as they have a long term vision.
Know a good investment when you see it and be smart enough to make it.
Money Mindset Myth #6 – I Make Enough
You bring home your check every two weeks. Your house payment is always made on time. And your bills are current. Yet, you have nothing left for savings, and little, if any, for life’s extras. You might make enough, but you’ll never reach financial independence if you can’t get ahead. You don’t want to be 50 without any retirement assets.
Assets determine your worth, and if you want to grow your financial portfolio, you must find a way to start saving and investing.
Money Mindset Myth #7 – My Today Is Taken Care Of
Too many people live in the moment. Even in today’s economy, it’s difficult to look past now to see the promise of tomorrow. Yet, right now is when it’s essential to plan ahead. What will your reserves be like as you head into retirement? Not putting away what you can now is a near guarantee that you won’t have enough when you need it in the future.
Take advantage of easy options like payroll deductions into an employer-matched 401K. Even those who invest may be doing so too conservatively for their age bracket and miss out on the advantages of compound interest. Remember that money coach we talked about? Ask him or her how to best proceed.
If you don’t have one, then at least start saving into a retirement fund today, so that you can start planning for future success.
Money Mindset Myth #8. I Only Need to Save for Retirement
Saving doesn’t stop once you pad your retirement accounts. We hear a lot about planning for life after full time work, and some of us will save for that. There are also closer milestones to plan for though. Marriage, starting a family, and home ownership tend to occur in the 20s and 30s, but many people don’t plan for these expenses, creating more excuses to go into debt.
And it’s not just that one time expense either. Living with another person, having kids, and owning a home all changes monthly budgets considerably. Spend some time to plan and eliminate any surprises that can come your way.
Money Mindset Myth #9 – I Can Incur Debt as a Means to an End
Many have picked up the cultural cue that debt is necessary to get by in life. And it starts early in life too. Student loans are viewed as essential to gaining competitiveness in a tough job market – a short step away from justifying credit card debt to support your lifestyle while going to school. Some educational debt might be necessary, but experts recommend incurring no more than an entry level-salary in your chosen career path.
You should also reduce consumer debt by choosing cheaper entertainment, going on a spending freeze, or using shopping apps and discount programs to save on consumables. Most importantly, stop blindly spending. Make the decision to take control of your money. No one is at the mercy of their situation — there’s always something you can do to spend less, save more, and improve your financial outlook.
Money Mindset Myth #10 – Thinking “Plan B” Isn’t Necessary
Far too many people would rather save for a vacation than for an emergency fund beyond a credit card. Even if you can only save a little at a time, it will eventually pay off – especially if you choose an option like a high-yield savings account. Set aside the equivalent of six months’ living expenses and designate it exclusively for financial emergencies.
Money Mindset Myth #11 – I Can Stay in That “Dead-End” Job
Sometimes, the most dangerous job isn’t the one that doesn’t pay well, but the one that pays decent enough that you don’t try to look for another one. The long term is important. Are you working in a dying industry? Does your job offer advancement opportunities?
Look at your colleagues in your field? If you are younger and there aren’t anyone over the age of 50, it might mean that you’ll be phased out of a job by the time you reach that age.
Don’t be complacent and keep striving for better job prospects. Your financial future will depend on it.
Which one of these money mindsets are holding you back?
This article originally appeared on MoneyNing.com. Let us know what you think (or read what others thought) here.