Common Limiting Money Beliefs That Aren’t True

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There are limiting money beliefs that we all believe to be true. Turns out, they’re myths.

It’s not the things you don’t know, but rather the incorrect things you believe, that cause many of the real challenges in life. A few errors in your thinking can be a detriment to your finances. Enhancing your understanding of money and personal finances is an effective way to get on the path to prosperity. 

Avoid these money myths:

  1. Income equals wealth. People that make more have a tendency to spend more. Lottery winners are notorious for losing everything. Many of the families that earn over $1 million per year manage to outspend their income. You can earn a very high income and still live paycheck to paycheck.

Wealth is what’s left over after you’re done spending. The more money you’re able to invest in appreciating and income-producing assets, the more you can expect your wealth to grow. A high income provides opportunity. It doesn’t provide a guarantee.

  1. More money equals more happiness / Money has nothing to do with happiness. Studies have consistently shown that more income results in greater levels of happiness to a point. The break-even mark appears to be $75,000 per year.
  • If you’re earning less than $75,000, you can expect your feelings of happiness to increase with a greater income.

  • If you’re already earning that much or more, more money isn’t going to make you feel any better.
  1. Wills are for rich people. Everyone with children or assets needs a will. Unless you want the courts to decide who will raise your children and receive your assets, you need a will. A simple will is only a few hundred dollars. You might even be able to do it yourself for less.

  2. Owning is better than renting. From a financial viewpoint, it depends. Mortgage interest is deductible, but it’s still a significant expense. Home ownership also includes property taxes and maintenance. The upside is the potential for appreciation and a place to call your own. Crunch the numbers and decide for yourself. Renting is generally advantageous in the short-term.
  1. Quality and price go hand-in-hand. There are many examples of this statement being false. Generic drugs are identical to the brand name version and cost much less. Companies price goods and services in order to maximize profit. That means the perceived value affects pricing, not the actual value.

Many items are priced to accommodate expensive marketing campaigns. The Beats headphones so popular with teenagers are considered by experts to be only worth half the common retail price. In this case, you’re not paying extra for higher quality.

  1. An index fund never wins. Over time, index funds outperform the majority of managed funds. More often than not, the lower expenses and turnover rate of an index fund are more important than a professional stock-picker. Take advantage of the ability to match market returns for very little expense.
  2. You should never have a credit card. Credit cards are a wonderful invention if used properly. However, credit cards also provide a means to spend money you don’t have. This can be a challenge or a godsend, depending on the circumstances. Credit cards can also help (or damage) your credit.

Are your erroneous beliefs limiting your financial growth? Consider all of your money beliefs and question if they might be incorrect, too. Having accurate beliefs enhances decision-making and results. Avoid buying into the myths.


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How to Spend Less Money To Avoid Stress

Sometimes stress – even money related stress – makes it tempting to spend more money.  But learning how to spend less money is one of the best ways to reduce stress or to avoid stress all together in the first place. How To Avoid Spending Money As A Stress Reducer Retail therapy is very common among consumers today because it offers a quick high when you run that charge card or pay for something new.  However, spending money to relieve stress can quickly turn into a problem. The cycle of addiction is referred to frequently as a downward spiral.  That’s because you get a high the first time you do something and you never get that same high again.  Instead, you find yourself doing more and more of the drug and never feeling as good as you did the time before.  While people are usually talking about drugs or alcohol, these principles apply to other addictions such as gambling and even shopping. Shopping Addictions Lead To Debt If you find that you’ve got a shopping addiction, you may also find yourself in debt that you can’t manage.  When debt gets out of control and you match that with a failing economy, you have a recipe for financial disaster and a lot of money related stress. If you’re spending money to relieve stress, it’s time to take a look at your habits and get control of them now by learning how to spend less money and keep your finances under control. The First Step Is Important: Identify The Source Of  Your Stress The first step is to identify what issues are making you stressed in the first place.  If you can eliminate the things that are stressing you, that’s the best way to conquer your problem. But some stressors simply can’t be eliminated completely.  In that case you may need to find alternatives for dealing with them.  For example, instead of shopping you can spend your time with your family doing more constructive activities such as game nights, free nights at the museum, and even going to the local park.  You can also throw yourself volunteering, which is a great stress relief activity that provides you with feelings of worth without emptying your wallet. You May Benefit From Professional Counseling If your spending is getting you into trouble and you need professional help to figure out how to spend less money, you may want to try speaking with a counselor to help you conquer your addiction. Above all, don’t be embarrassed about your problem.  Many people have problems learning how to spend less money  instead of shopping to relieve stress.  So you are  not alone.  There are several; steps you can take to alleviate financial stress. When you get control over this problem, you’ll feel like your life is your own again.