7 Myths &Misconceptions About Saving Money

7 Myths &Misconceptions About Saving Money

Financial freedom is a state wherein an individual is debt-free and can live comfortably within their means. It is truly something many of us should aspire to have. However, in order to achieve it, we need to keep working hard and to keep setting aside money in our savings.

As a result, many of us turn to “financial experts” that could help us in this endeavor. Sadly, there is too many misinformation out there. For instance, did you know that credit cards can actually be good for your financial health? This is completely true, especially if you know how to responsibly use them. But not many people know this because there is too much “advice” saying otherwise.

To help you out, we will be discussing 7 myths and misconceptions when it comes to saving money. Read them below.

Budgeting is for those who have debts to pay

It is true that budgeting can help those who have debts to pay. However, this doesn’t mean that just because you don’t have debts to pay you no longer have to maintain a budget. This is a misconception many people believe and so a few of them end up not saving enough money AND actually in debt.

Budgeting is for those who have future goals

Having future goals to encourage you to save money is good and all, but you don’t need them to actually start having a budget you can follow daily.

Sticking to your budget is a good habit to have as early as possible. This is because it will help you be smart when it comes to financial matters. Plus, it certainly doesn’t hurt for you to start setting aside money for your retirement fund.

You should never go beyond your budget

Sticking to your budget should be a monthly goal. However, this doesn’t mean that you can never go beyond it, particularly when you need it the most.

Let’s say that you have a monthly budget of Php500 to take care of your health (vitamins, medicines, etc.) and you happen to get sick this month. Naturally, you may end up spending more than that to recover from your sickness. If this happens, don’t get discouraged and try to maintain the rest of your budget as much as possible to somewhat regain the costs.

No need for a budget if you have no issues saving money

Some people see saving money as a chore. If you are not one of them and you have no issues putting away your hard-earned cash into a savings account, then good for you! However, this does not mean that you no longer need to have a budget.

Keep in mind that a budget is there to set some spending guidelines. Without it, you won’t know your own spending habits and, therefore, wouldn’t know when you start paying too much for your expenditures.

Earning too little means you don’t have to keep a budget 

If you believe that your monthly income is just enough, and you have no reason to have a budget, then you’re completely wrong.

Budgeting can help you determine all the necessary cuts you can make on your spending. And so, even though you believe you are making just enough, you can still write down a budget that will work for you. 

Debt can be used as a tool

Small business owners have a saying regarding debt being a tool they can use to expand and grow their business. But this should not be the case at all.

Although taking on loans and debts can be helpful in some instances, they will surely lessen your monthly savings. Therefore you should not consider taking on loans unless you absolutely need to.

Having car payments is conventional

You might believe that car payments are normal, but they certainly aren’t healthy for your savings. Plus, if you think about it, these are payments you are making towards an item that has a decreasing value.

As much as possible, try to forego spending for car payments. In short, opt for a used car instead of a brand new one.

Takeaway:

Budgeting is for everyone. It doesn’t matter whether you don’t have any future goals, don’t have issues with your savings, or are earning just the minimum, it can assist you with your daily spending as well as with your savings.

Also, do remember to practice some frugal habits and avoid taking on loans and debts when you don’t have to because these things could lead to financial ruin, which is the exact opposite of financial freedom!

Sources:

http://www.businessinsider.com/why-you-should-use-credit-cards-2018-1

https://www.inc.com/sean-stein-smith/can-taking-on-debt-help-your-business-it-just-may-be-secret-sauce-you-need.html

https://money.usnews.com/money/blogs/my-money/2013/01/28/debunking-savings-myths-and-misconceptions

https://www.thebalance.com/budgeting-myths-you-should-ignore-4119932

https://www.daveramsey.com/blog/foolish-money-myths