When it comes to finances and money, there’s quite a bit of misconceptions out there. If you don’t be careful, then they can keep you from making smart money decisions, or worse, holding you back from reaching your goals.
Let’s debunk some of the most common myths.
#myth 1: You need to have lots of money to invest
Arg. This is one of the bigger myths out there. It’s just not true. You don’t need to be rich to start investing. There are micro-investing apps where you can start investing with as little as $5. You can start small to get a taste of what it’s like. Use the experience to learn and get educated.
#myth 2: Rent money is dead money
Not everyone wants or can afford to buy a home. The average age for first home buyers in Australia is now 36 years old. Renting a place isn’t necessarily a waste. It offers lower upfront costs, flexibility and the freedom to move around. But this is also dependent on what you’re doing with the money that you’re saving by not buying a house – are you investing wisely and thinking about your financial future?
#myth 3: You need to be wealthy to have estate planning
I’ve talked about this one before, but almost everyone should have a plan in place. Having proper estate planning can help your assets to be distributed to your exact wishes, make sure your loved ones are looked after and help to minimise legal complications. Tools like a will and power of attorney can help to provide peace of mind for you and less stress for your loved ones.
#myth 4: Using professionals is a waste of time and money
Some people believe paying for financial advice is a waste of money and time. But the thing is a professional can offer you strategies and insights that you may not even be aware of. This goes for professionals in many areas that affect your financial life, like brokers and conveyancers for a house purchase or an accountant for tax strategies and tax returns. The key is to find a great one that acts with your interest at heart! So why not ask questions about their advice, fees, conflict of interest and their previous experience of dealing with a client with your circumstances. If it doesn’t feel right, then get a second opinion.
#myth 5: I can plan for retirement later
Procrastination is the enemy of financial freedom. When it comes to planning for retirement, the earlier the better. There’s a quote that’s attributed to Albert Einstein that says ‘Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it’. While it’s highly improbable that Einstein did say this, the sentiment is still true. With compounding, even small contributions can have a massive impact, if you started early.
Believing in these myths can hold you back. So don’t let them.
Get started on your journey, start small, ask for help when you need to, don’t be afraid to ask questions and challenge your (and other’s) thinking. Hope your journey is guided by lights of truth!