I shouldn't talk about money with others.
While it's true that we need to be careful about who we talk about money with, it's important to talk to our kids about money. Budgeting when they get their first job is a great place to start. You can start as simple as save and spend. As they get older and start making more money, teach them to add more categories. Showing your kids how you budget will help them prepare to budget as they get older. Children learn more from your money actions than you may know.
Only people who make six figures are wealthy.
What does wealthy mean to you? Wealthy is a term that seems to have either a very negative or positive view connected to it. We all think we know who the wealthy are. Usually all we consider is money. Think about the other kinds of wealth: emotional, physical, social... Yes, having money is one way of being wealthy, but there are so many other things in our lives that bring us wealth. This could be finding and doing the things that you enjoy, spending time with loved ones, and creating good habits. Being wealthy doesn't require money. Money helps, but life is about so much more than being financially wealthy, driving the nicest cars, living in a big home, taking extravagant vacations, and wearing name brand clothing. Watch for the ways in your life that you are emotionally, physically, and socially wealthy for the benefit of yourself and those around you.
Poor people are bad with money.
Just because one doesn’t have a lot of money, doesn’t mean they are bad with money. What does poor mean? We all have a different definition of poor just like we all see wealth differently. The individuals who don’t have much financially are usually very savvy with their money because they have to be in order to reach their needs. When wealth does come their way, they usually continue to live a frugal lifestyle because they believe that money isn’t going to last.
I don't make enough to budget.
If money is tight, you need to see where you are spending it. Budgeting is essential to make sure you have enough for bills as well as food, gas, kids activities, etc. Budgeting allows us to stretch our money because we know exactly where it’s going.
I'll never have enough to retire.
Many who start saving for retirement later in life don’t believe they’ll have enough to retire. While it’s true that starting young to give yourself time to save is great, there are still ways to be able to retire if you start later. Start a conversation with your financial advisor to find out the best route for you!
Rich people live in large homes, drive luxury vehicles, and wear name brand clothing.
This is who we THINK the rich are. It goes back to how we define wealth. In reality this family might be “keeping up with the Jones’” and barely getting by. My great grandparents were financially wealthy and bought their clothes at Walmart. The outward appearance only shows what they want you to see and/or believe.
I’ll be happier if I have more money.
Some think that more money means more happiness. The truth is, while some will be happier with some more money, it’s not always going to be the right fix. Studies have shown that once you have enough money to live comfortably, more money doesn’t make you happier. How you spend your time and days will help you achieve happiness faster than money ever will.
Rich people are evil.
This might be my favorite myth. Many of us hear about neighborhoods around us and how the individuals of that neighborhood act because “they’re rich” and “have money”. How many movies have we seen the rich person betrayed as evil? Think Cruella De Ville in 101 Dalmatians or Syndrome in The Incredibles. We’re conditioned to believe that rich people are evil. Because of this belief, many of us won’t become rich because we don’t believe that we are evil. Is it the money that makes a person evil?
Events early on in life associated with money affect your financial decisions into adulthood.
As we grow up, we may not realize it but we watch what our parents do with their money. In return, we tend to handle money similar. If someone heard their parents constantly saying they don’t have enough money, they may start believing that there’s never enough money. This leads to a lot of anxiety surrounding money.
How do friends and family handle their money?
We’ve all heard it before, but I’m going to say it again. Be intentional about who you surround yourself with. Their habits and actions will likely become yours. If you’re constantly with friend who spend money like it’s no object, you might go from being really good at saving or budgeting to spending money like them. We want to keep up with our friends and family. We want to be accepted. The way we spend or save our money can help us achieve this in certain circumstances.
If you don’t manage your money, it will manage you.
Dave Ramsey has said, “You will either learn to manage your money, or the lack of it will manage you”. Learning why we think about money and handle our money the way we do will allow us to break some of our bad habits with money. This may have to do with saving, spending, budgeting, retirement, etc. Find your why and determine how you will gain a healthier relationship with money. If I am constantly spending money and in return am stressed that I don’t have enough money, I’m going to start budgeting so that I can see where my money is going and stretch it further. If we don’t control our money, it's going to find a way to manage us whether it be on an emotional level or physically not having enough.
Buy low, sell high
This one makes sense in theory. You can buy more at a lower price than at a higher price, so we want to buy when prices are low and sell when prices are high. This can apply to a lot of things, but usually you hear this when we’re talking about the stock market. Many of us understand this principle but we panic when prices drop because we lose value and then want to invest in the market when prices are higher because we associate that with the market doing well. Many feel security based on the value of their investments and panic when they see that number drop. Attempting to change the way we think about it and realizing that we don’t actually lose money until we sell our investments is important here, but definitely not easy.
Debt comfort level
We all have different amounts of debt we are comfortable with. I may be comfortable with a $100 debt repayment plan while my neighbor may be comfortable with a $1,000 debt repayment plan. Because we all have different comfort levels when it comes to debt, if someone were to come and pay off all of our debts, we would accrue more debt to get back to that debt comfort level.
Taking care of friends, family, and neighbors is always good.
Everyone wants to take care of their friends, family, and neighbors. Many of us have been taught that we should be in service to those around us at all times. That doesn’t mean that we should give until it hurts. It’s important to meet your own needs before helping others meet theirs.
Sticking to a budget – What happens when we fail?
Starting a budget is hard, but it’s good to see where your money is going and to be able to take control of it. Sticking to a budget can be hard when we find things that we want even if we don’t necessarily need them in the moment. What happens when we give into that temptation? It’s easy to feel like we’ve failed because we got a little off track. Budgeting is just like anything else in life, we just have to continue trying and get back on track when we get off track.
Elexys Thomas graduated from Utah Valley University (UVU) with a degree in Personal Financial Planning - a top 3 school for financial planning and has passed the Accredited Financial Counselor exam. She is passionate about sharing financial principles and helping individuals and families meet their financial goals. She'll be updating this page monthly to help you with your financial wellbeing. You can reach her at elexys@teamworksgroup.com