6 Money Lies You Need to Stop Telling Yourself Now
By: Walid Ao
Tags: Financial Planning, Saving, Money, Personal Finance, Finance

6 Money Lies You Need to Stop Telling Yourself Now

Lie #3 will blow your mind

Believe it or not, we all need money to survive in our daily lives. We use money to buy stuff, pay rent, go on vacation, get a better education, etc.

Many of the facts that we believe to know about money are just lies that keep us from developing our money and financial mindset.

Lies, such as you need a good-paying job to be rich, is a prime example of what we tell ourselves to keep ourselves down and under pressure.

In the following, we will go through 6 money lies we tell ourselves and how to get out of that negative mindset.

Disclaimer: The content of this story is for entertainment purposes only. It is not a professional or legal advice. Ask a professional before taking any major financial decision.

Lie #1: My money problems will go away on their own

Do not be oblivious when it comes to money. If you run out of money before the next paycheck, or if your credit card bill is getting larger every month, then you are doing something wrong, and you need to change your financial habits.

To solve your financial problems, follow the following steps:

Know your spending

Understand your spending habits and check whether you can change something. Stop paying for stuff, which you are not using. The majority of us are subscribed to multiple streaming services, even though they do not necessarily use them all. If you pay for a fitness studio and haven’t been there in ages, cancel your membership.

Optimizing your spending habits is the first step to solve your money problems. Define a strict budget

Define a strict monthly budget for food, groceries, clothes, and outing. Do not exceed this budget and control it as well.

For example, if you plan to spend 500$ a month, then that’s $16.6 a day or $117 a week. Live it religiously. If you spend $100 on groceries on a particular week, you only have $17 for the weekend, and It might be best to tell your friends that you will stay home watching Netflix. Payback debt

Payback debt as fast as possible. Now you know your spending, and you live based on a strict budget, use the excess money to pay back your debt. High-interest rates on your debt can burn through your money. Prioritize paying back debt before you go on your next vacation or do your next over the top purchase.

“If you won’t attack a problem while it’s solvable and wait until it’s unfixable, you can argue that you’re so damn foolish that you deserve the problem.” — Charlie Munger, vice chairman of Berkshire Hathaway

Lie #2: I need a large income to invest

People believe they can only start investing if they have a large income. This can’t be further from reality. Current apps, such as Robinhood, allow you to start investing with a couple of dollars.

Understand your spending and financial situation. After you assign money to pay back your debt, invest your money, and diversify your portfolio.

To start investing, check the following story titled “investing for beginners.”

It is a fact that you don’t need a large income to start investing. Do not wait for the end of the month to invest. Check your income vs. your spending and monthly reoccurring costs and set aside a fixed amount to invest monthly.

Lie #3: I won’t become rich

Many people think they will never be rich. However, this statement is not based on any facts. It is only based on their mindset and the mindset they inherited from their parents.

For example, let’s look at the bestseller book, “Roch Dad Poor Dad.” The book sets a comparison between Robert Kiyosaki’s father and his friend’s father. Kiyosaki’s father was not poor — per se, but he wasn’t good at managing his money. He was still in the vicious circle, and therefore, he was living paycheck to paycheck. His friend’s father, on the other hand, was financially literate and taught himself money management. As a result, his friend’s father became a millionaire.

It would help if you had the correct mindset and financial literacy to make it and become rich. Get inspired by others who made it and try to learn from their attitude.

Believe in yourself and adapt the correct mindset.

Lie #4: Good pay is an excuse for a lousy job

This is the biggest lie we tell ourselves. We tolerate bad jobs with toxic environments for good pay. We forget that other factors contribute to our “rich” status.

Happiness, work-life-balance, and free time contribute to being rich as well. Here, we have to differentiate between only money rich and real rich. Being money rich with a stressful life, and no free time is not considered real rich. Real rich is the right balance between money rich and life rich. It is the right balance between having the necessary capital and the time and mindset to enjoy this money.

Lie #5: I can start investing at a later age

Young people believe they can start investing at a later age with no disadvantages in their lives and financial goals.

For our example, let us consider two individuals; Mark and Thomas. Mark invested $5,000.00 at the age of 20, and Thomas invested $5,000.00 at 30. both of them contribute $50.00 monthly to their investment portfolio. We will assume an interest rate of 7.5% annually, and both Mark and Thomas are saving until they reach 50 years old. The following diagram shows you the development of their savings over time (Mark: blue / Thomas: orange). The difference in contribution between Mark and Thomas is only $6,000; however, the difference in their savings is $58,592.