Common Misconceptions about Saving Money

Topics concerning money have always been regarded as one of the most important ones in the average adult’s everyday life, and of course, among all the good advice that are out there, there are quite a few popular myths too. Naturally, one cannot avoid making mistakes completely, as this is an essential part of being human, but why not to try to prevent at least some of them by learning more about the most common mistakes that people make when dealing with their budget. Saving is a particularly controversial topic for many, for various reasons.

You don’t need to Do It Forever

Often, people think that only those who are obsessed about money are the ones who are financially independent. However, not everything that you do or think needs to revolve around improving your finances 24 hours a day, and often it’s quite enough to establish good habits and stick to them. If you plan your finances well enough, earn enough from your job and receive an extra income from outside your paycheck, then you should be able to relax a little and enjoy your life from time to time, with no need to think about money constantly.

It’s Not About Profiting from Interest

Unfortunately, the old and simple scheme to rely on the interest rates from a saving account for additional income is proven to be outdated. A couple of decades ago it was a lucrative opportunity when the interest rates were around 5 %, but nowadays it is quite hard to find rates above 1%, since banks and other credit institutions don’t need so much cash from depositors anymore. So it is safe to say that saving accounts are definitely not the best option when it comes to investing and expecting a higher yield. 

It’s Never Too Late to Start

Even if you haven’t always made very sensible financial decisions in your past and you lack the confidence to turn your situation around, one important thing to realize is that things like old age and mistakes are just an excuse. Like with many other areas, the first steps here are proven to be the hardest, but if you start with small steps and are consistent with your goals, there is nothing that could keep your lifestyle and spending habits from doing a 180 degree turn. Just prepare an achievable plan for yourself and stick to it and be patient – you will be rewarded for sure!

You’re Not Limited to Your Main Salary

A common misconception about saving and spending is that one should only rely on his or her paycheck. Many people stay away from investing, often thinking that it’s limited to professionals in the field. Other people tend to feel secure once they have reached what they think is a high enough salary. However, even the highest earners can find themselves in financial emergencies when the monthly paycheck is not enough for all bills. Even if you are total novice in investing, it is always good idea to set some time aside and get familiar with the basics. Probably a good start would be to learn more about saving accounts or Certificates of Deposit (CDs).

You Don’t Need to Keep it All in One Place

Probably one of the biggest lies about proper money saving is that everything that is set aside needs to go to one bank account and never be spent at all. But even though pouring every bit of savings in the bank may sound like a safe and sound idea, this could prevent one from pursuing lucrative and attractive opportunities that could eventually be profitable in the long term. What needs to be understood is that financial security involves much more than just piling your means in a neat saving account – think whether it is possible for you to invest part of your savings. It’s better if you don’t put all of your eggs in one basket as the popular saying goes. In fact, you should even feel free to stray a little – look into taking out a bad credit loan to fill a hole in your investments, for example.

It’s Not Difficult to Keep Track of Things

Dealing with financial matters may sound intimidating to some people, but you don’t need to be a financial wizard in order to adopt some simple and yet useful habits when it comes to managing your money. For example, why not try to record all of your monthly expenses and once you have gathered your full list of spending habits, you can easily organize your data into categories. In that manner, it will be a piece of cake to see if it is possible to reduce the amount of what you pay in some areas. 

All in all, money saving needn’t be such a great mystery especially if one follows some simple rules and builds some useful habits. It would be the best for you if you take the time to decide on your priorities and understand what is important for you in the long-term. With some dedication and patience you will soon be on your way to achieving your goals.