We all have to make financial decisions every day and we always try to do what’s best. But if you base your decisions in one of these misconceptions, your results might not be as good as you would expect.
We go through life learning valuable lessons and learning how to build healthy habits to deal with money. And as we grow older, we have more tools and means to make better decisions. However, there are some misconceptions around money that are usually more fiction than not.
1- The richer, the happier
If you didn’t know it by now, it’s about time you do: being happy is related to liking yourself, which turns out to be completely unrelated to money.
Wealth can buy recognition, but respect (and self-respect) are not for sale. Instead of obsessing with money, think about what really makes you happy and make only enough money to take part in those activities.
2- A bigger income will keep you out of debt
This is just not true. It doesn’t matter if you make $50,000 or $500,000 a year. If you don’t plan your finances and you don’t build an emergency fund, you will be on the verge of an economic disaster should something unexpected happen.
Your living expenses (and your debt) usually rise with income, so the answer isn’t making more money. It is simply not borrowing money.
3- Millionaires look like millionaires because of the car they drive or the clothes they wear
The answer is no. Actually, quite on the contrary. Self-made millionaires tend to live a frugal life. Actually, there is a book called “The Millionaire Next Door”, that shows that the average American millionaire drives an unexciting American car, lives in the same house they’ve owned for years and dress just like you and me. And, actually, that is how they became millionaires in the first place.
4- Life is funnier if you have more money
Not necessarily. While money can provide you with a lot of elements that will furnish your life, the reality is that if you need money to have fun, you are boring. That’s a fact.
5- Money equals security
This is true in a way, but there is not enough money in the world to have absolutely everything under control. So the premise is relative. Having money will allow you to have more or less control over some aspects of your life, but then again: the difference between control and chaos is just an emergency fund. And that is something you should save for, no matter how fat your paycheck is.