Money can be a sensitive subject, and many of us avoid talking about how much we earn, how much we spend, and what steps we’ve taken to land in the financial position in which we’ve found ourselves – whether that be good or bad.
Another thing that always varies, is the type of financial education that most of us receive.
For most people, everything we know about finances comes from a sloppy, confusing mix of what our parents taught us, and information that we’ve managed to find ourselves through the internet and personal finance literature.
However, there are a number of money lessons that most people have been taught that aren’t actually true.
Whether it be things you’ve been told about how to earn a lot of money, misconceptions about debt or simply how to manage your finances efficiently, here are some of the biggest lies that you’ve ever been taught about money.
4 Biggest Lies You Were Taught About Money
YOU NEED A DEGREE TO GET A WELL PAYING JOB
This is possibly one of the biggest lies about money that has ever been told.
Let’s set this straight – you do not need to go to university to make a lot of money. Nobody’s saying that you shouldn’t go to university or aspire to get a good education, but if you’re only going because your parents tell you that that’s what you need to do to make a good living, then it might not be the right choice.
If you’re going to uni because you dream of becoming a doctor, lawyer or any other profession that you have to have a degree for, then that’s totally awesome and you should go for it.
But know this, there are plenty of ways to make a good living without studying for a degree, and you need to consider whether or not the amount of debt that you’ll accumulate during your studies, will pay off with a well enough paying job at the end of it?
You might decide instead to skip uni, and start your own business, work your way up from the bottom in the corporate world, or invest money from a young age to create wealth later in life.
MONEY CAN’T BUY HAPPINESS
Okay, this is a bit of a sensitive one – it’s true, all the money in the world won’t make you happy if you don’t have friends and family or love in your life.
BUT – having financial stability, the money to pay for excellent healthcare, the best education for your children and the money to support your family and buy them nice things, will help you lead a happier life.
Money troubles are one of the leading causes of depression and divorce – so while money won’t buy you happiness in the form of materialistic items, financial stability will provide your family with a safety net that will make other elements of your life a lot more enjoyable and take away some pressure when you find yourself in troubling situations.
DEBT IS ALWAYS BAD
People hear the word debt, and cringe at the idea of high interest rates, damaged credit scores and the ongoing struggle of paying it off.
Whilst credit card debts and personal loans can be detrimental to your financial health, that doesn’t mean that all debt is bad.
Debt in the form of investments is one of the best ways to grow your net worth. A real estate investor might have hundreds of thousands of dollars worth of debt in his name, but own loads of properties which are providing him a healthy regular income, whilst also going up in value over time making those ‘debts’ a very valuable asset.
It’s also worth thinking about whether or not it’s better to make large purchases outright, or should you finance those purchases instead.
You might have the money in your bank to buy a £30,000 car in cash, or you could buy the same car on a finance agreement which charges you 3% annual interest. Whilst paying outright would save you money on the interest, you’ve now put £30k of your money into a purchase which is going down in value. You might have been better to finance the car despite the interest, and invested the £30k somewhere else where it would grow at a rate of more than 3% per annum.
YOU CAN ONLY PAY OFF DEBT IF YOU SAVE MORE
Whenever you hear about how to pay off debts, the number one thing that’s always said is that the only way to pay it off is to stop spending and save every penny.
That’s one way to do it, but that’s not the only way to do it – or necessarily the best way.
You’re better off to boost your income somehow than to save every penny in order to pay off debt. It’s a good idea to cut back on a few unnecessary expenses aswell, but you’ll likely pay off your debt a lot sooner, and be a lot happier in the meantime, if you create some extra income in order to make your repayments.
You might be thinking, well it’s all well and good saying go and earn more money, but how am I gonna do that….? Glad you asked, here are 25 Easy Ways to Earn an Extra £1000 Every Month.
To Finish Off…
I really hope you enjoyed this post, and that it’s opened your eyes to see that some of the lessons you’ve learned about money aren’t exactly true.
Every single person’s financial position is different, and I haven’t written this post to be insensitive or cause offence to anybody, but more to open your eyes to the fact that just because your family have taught you one thing about money, doesn’t mean that you can’t question it and take your own path in life.
Make sure to share your thoughts about this topic in the comments below, and check back soon as I post brand new lifestyle and personal finance tips on The Angelina Archives every single week.