Most moms think they are financially savvy. However, many people hold financial notions that simply aren't true. It's difficult to make sound decisions when they're based on false beliefs. Adjust your beliefs and you'll strengthen your foundation for sound financial decisions
Beware of these financial myths:
1. Money and happiness aren't correlated. Actually, a study done at Princeton University showed there is correlation between income and happiness, to a point. Happiness and emotional well-being improve with an increase in salary, up to $75,000. Beyond that, however, further increases did not provide additional improvements in attitude.
* Other research shows that money is a factor in happiness, but it's not the most important factor. The level of respect and social influence a person receives is the most important factor. Of course, money has some influence on these two items.
2. There is no way that 'I' can become wealthy. It's not a coincidence that a disproportionate number of extremely successful people come from poor backgrounds. It's staggering how many highly successful people never finished high school. Average people tend to get average results.
* If you struggle to fit into the 'norm', you might be destined for greatness, though it is likely to be challenging.
3. There is only one formula for calculating a credit score. This simply isn't true. The most respected and widely used credit score is the FICO credit score. However, the credit bureaus have their own formulas, and many financial institutions use their own scoring system.
* All scoring systems result in similar scores about 80% of the time, but there can be significant differences.
4. There will be enough time later. Many of us put of saving for retirement or our children's education until a later time. We're under the impression that things will be easier later. They might be easier and they might not. But will there be enough time for your savings plan to be successful?
5. More education means more money. In most cases, a higher degree does mean a higher income. Those with a college degree earn approximately a million dollars more over a lifetime than those with a high school education. Those with doctorate degrees average another million on top of that.
* However, in many fields, those with a degree do not earn more. Postal workers and electricians, for example, do not earn more money with a degree. In some fields, those with graduate degrees actually earn less. Editing is an example of one of those fields.
6. Budgeting is the best way to save money. A household budget is a great idea, but a budget for a single item turns out to be a bad idea. People that shop for a single, large-ticket item often spend 50% more if they shop with a budget!
* That means, if you're going shopping for a new refrigerator, just go get what you need. If you set a budget, you're likely to come up with the highest number you can afford.
7. You need to make a certain salary before saving is possible. Start today. Did you know that the famous TV personality Jim Cramer saved 15% of his income when he was so poor that he lived in a car? How much is he worth today? He is worth nearly $100 million.
Did you believe in any of those myths? Hopefully, you learned something and are now in a better place for making wise decisions. Eliminating false beliefs is incredibly powerful. Continue learning and your financial expertise will continue to grow.
