Five money myths that empty your wallet

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Every month end when we are breaking for cash & credit limit for our cards is near to exhaustion, we come at a conclusion, that we are overspending, influential, non-thinking, sub-optimal individual who cannot earn substantial amount of money and live like orange county member. In spite of this the moment whenever we come across signs such as, “sale – 50% off”, “Buy 3 get 4 free”, “The more you spend the more you save”, etc., we end up buying stuff which are literally not necessary let alone the question of affordability. If you ask any individual whether he/she would like to save money? majority times the answer would be “yes”, but if you ask them “what is stopping you from doing it?” the answer would be illogical facts, which many believe in, yet are nothing more than made up stuff aka myths. Every person on this planet requires money, however it is the attitude towards it that defines us as a person and thereby our lives. So let us break some of these infamous myths and bring you to the world of practicality.

1. Things I cannot live without

Every individual need three mandatory things in his/her life which are food, clothing & shelter, apart from that nothing is essential or mandatory. Things like cars, bikes, luxury items, electronic gadgets etc., are not must in anybody’s life, yes of course they make things easier to live with, but come with a premium cost which may create a huge hole in your pocket. If they aren’t present in your life it will not make your life unlivable or worthless, hence purchasing them should not be your priority number 1. It is absolutely ok to have such non-essential items until they do not put pressure on your savings & expenses relating to daily necessities. Therefore, prioritizing you needs with absolutely essentials first, savings second and if budget approves the non-essential stuff could make life more worthwhile.

2. All hail the sale

Possibly the most followed myth and also the most damaging of them all. First of all, no company or seller would like to sell their products at loss, so you might think you are actually buying stuff at discount, however in reality you may not. Secondly just because it is a sale, does not create an automatic mandate to buy things which you don’t need. You don’t suddenly get a revelation that you need a scented candle in your bathroom and you have arrived just at the right place, at the right time. To narrow it down sale often makes you purchase things which you barely need, and on top of that, you end up paying exorbitant figures for it.

3. Shopping with credit card makes you smart

Really? Might sound like fun for starters but is in fact playing with fire. When you buy anything on credit card, it is like using someone else’s money, thus one miss in repayment installment and you end up in trouble. Credit card is the most expensive loan amongst all, therefore any messing around with its payment could make you pay double for it. It is always advised to buy stuff which you can afford, this way you pay exact worth of the product and that too without worrying too much about the interest or late fees.

4. Credit card is the only way ahead

Buying stuff on easy monthly installments, reward points, pay minimum balance and move ahead, discounts on online shopping, airport lounge visit, free movie tickets, lifetime free card etc., are just some of sweet words which attract every individual towards the credit card trap. Human tendency trend suggest, when you have money in your pocket you are bound to spend. Credit card gives you that extra purchasing power which you forget is not yours but someone’s else is. When you spend credit card you have practically borrowed money and spent it on luxury. This borrowed money always remains due to be returned in time, which indirectly affects your future budgets and creates a hindrance in other plans. Having a credit card is not a bad option if only utilized in a proper manner, by enjoying its benefits and at the same time keeping your credit score healthy.

5. Bank or lenders never give me loan which I cannot repay

Another massive myth, that creates loads of problem and is one of the sources for filing bankruptcy. Consider your salary as 30K per month, yet when you apply for a credit card, you will end up getting a card with limit of least 50K. Considering that you do not have any liabilities on you, still if you end up using the entire card limit, how are you going to pay the money when your entire income is only 60% of the card limit? Banks & lenders have their primary income sources as interest money, all they expect from their customers is to borrow money, so that their business is run successfully, and not on whether you are able to repay the amount. Therefore for banks if you have a good credit score, you will always receive a loan higher than your repayment powers, which eventually become a trap.

It is a world-wide fact that money is force those designs each and everyone’s lives, this in turn has paved way for numerous myths and an impractical world. If you want a successful financial plan, instead of falling prey to impractical myths start managing money carefully and efficiently.