Are you guilty of any of these money misconceptions? Here are five ways you may be sabotaging your financial wellbeing and possibly your retirement options.
1. I have a good salary, so that means I’m financially secure and stable.
While everyone may have different ideas on what financial security looks like, a good salary is only part of the picture. Taking the time to determine what financial stability means to you is a start for building a path to achieve it.
The website Good Financial Cents
offers a list of common signs of financial stability. Here are a few to get you started:
2. Money is like anything else; everything works itself out in time.
You never overdraw your checking account
You’re never late with payments
You contribute a double-digit percentage of your pay to retirement
There are many different attitudes and approaches to money. With the “let it sort itself out” mindset, there is the tendency to not make active financial plans. One of the benefits of making and following a plan is the ability to reach certain goals or prepare for life events. Without a plan, it’s possible to not be ready or unable to act when an event occurs. It’s also possible to find no progress made towards reaching goals or realizing certain dreams. It’s also possible to find you aren’t financially prepared for retirement.
Purdue University has a workbook
on discovering and understanding different money attitudes.
3. Budgets aren’t worth all the time and effort it takes to make them.
For many people, budgeting is a great idea that can be really hard to put into practice. While budgets are easily seen as vital, they’re usually not seen as fun and it can take time before seeing the benefits.
Luckily, there are many resources and guides on how to create and maintain a budget for any sized financial goal.
4. There’s not enough money right now; saving can wait until later.
When it comes to saving money, it seems like the best time to start is usually “yesterday” with the next best time being “right now.” Saving for a vacation or the down payment on a house, setting aside money for an emergency fund or retirement are just a handful of the countless reasons to start saving.
The Simple Dollar
posted a list of 100 ways
to get started saving money and CNBC
offers 20 easy ways
to save some money every day. Of course, not all the ideas will apply to everyone but there is opportunity to find a handful of tips that make sense for your lifestyle. You can also learn more from Equity Trust’s articles “5 Simple Ways to Save Money
” and “14 Painless, Everyday Money-Savers that Can Have a Big Impact on Your Retirement
Here are few ideas from the Simple Dollar:
5. I’m keeping up on my payments, there’s no need to worry about my debt.
Write a list before you go shopping.
Prepare meals at home.
Check out free events in town.
Cancel cable or satellite channels you don’t watch.
Consumer debt comes in many forms: mortgages and student loans, credit cards and medical bills. Making the minimum payments can keep the account current, but it makes it a slow process to pay off the balance entirely. Not managing your debt can create precarious situations if an unexpected financial event occurs and you are unable to make those payments in a timely manner or at all. Lasting debt can also affect your loved ones, as discussed in Equity Trust’s article “What if the Legacy Your Loved One Leaves Behind is Debt?
The information provided in this article is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with legal, tax, and financial professionals.