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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Money Management Advice: 5 Tips For Financial Stress Relief

If you find yourself dealing with financial stress, it can be an exceptionally difficult time.  Fortunately there is money management advice available.  You mustn’t let the stress take over your life. If the bills are piling up, there are steps you can take to reduce your stress and your debts.

The most important thing to keep in mind when you’re faced with financial troubles is to make a plan and stick to it. If you need help with this plan, it would be in your best interest to seek out a financial planner.

Here are a few money management tips that can help you on your way:

1.    Don’t spend money to relieve your stress. It’s often tempting to reduce stress by going out for meals, entertainment, and other activities. This is clearly counterproductive. Instead, use some free stress relievers such as a warm bath, a good book, or a social event with friends at home.

2.    Accept your situation. Being unwilling to accept that you’re dealing with a hard situation can increase your stress. In many financial scenarios, you’re unable to control the situation. However, once you surrender control and accept it, you’ll feel better knowing that you can only do what you can to improve your financial outlook. It may take time, and that’s okay!

3.    Don’t be risky. If you have investments that may be on the risky side, it may be time to switch them to more of a sure bet. This security alone may ease your financial stress.

4.    Discuss your money problems with family. If you have a spouse, make sure you keep the lines of communication open. Many marriages suffer during times of financial stress, but with honest communication and careful planning, you can keep your marriage and family happy.

5.    Stay Organized. Make lists and keep a calendar. It’s important to schedule time for relaxation, too. You’ll need some time where you can enjoy yourself without worrying about anything – especially your financial troubles.

Have a Plan

Simply having a plan to improve your financial problems can reduce your stress level. Plans and goals will help you keep things in perspective and show you that you’re making progress towards a better life.

You don’t need to do this alone. There are many professionals available to help you create a successful financial plan, even in your current situation.

Here are some items you may want to review before forming your plan:

•    If you find that you’re spending more than you’re making, find ways to cut expenses.
•    See if you can pick up a part-time job or implement other ways to add to your income.
•    Look into refinancing options for your current loans.
•    Start using your debit card instead of a credit card.

Maintaining Your Health

People often forget how important it is to maintain your health. When your body is dealing with any kind of stress, it can take a toll if you don’t take steps to relieve it.

Next time you feel exceptionally stressed out, become aware of the state of your body. You’ll likely notice that all of your muscles are tense. Take a few moments to relax your muscles and take a few deep breaths.

While you may not have control of your financial situation, you do have control over how you feel about it. Focus on taking action to do what you can to improve your situation!

Start by following sound money management advice. If you apply what you learn you can be certain that better days are ahead.