The many myths of finance seem to stress the technical complications. Saving money is not technical and it does not require a degree. Below are five frustrating finance myths that need to be squashed.
There is Too Much Math
Personal finance does involve math. But, all the math is accessible and simple. Who says that one has to be able to calculate a decades-worth of compound interest to be financially responsible? There is no requirement that says one needs a math degree to get a grip on their finances.
The math equates to this basic idea- save more than is spent. If that occurs, a person is being financially responsible. Everything else is an extension of that one core idea.
Personal Finance is Investing
Personal finance is not investing. Strictly speaking, an investment is putting in money and expecting to get more out of it. There are some subtle difference between personal finance and investing. For one, an investment may not turn out well. It could backfire gloriously. Personal finance can’t when it is done right.
Personal finance is about budgeting and organizing money so it is not wasted. The money should never just be lost to the sea like an ill-timed investment. Sure, a bank may go under. But, the Canadian government protects personal accounts. In short, the personal finance comes first. The investing comes later down the road once one has a grip on their finances.
It is Too Technical
Many of the smartest Canadians have openly admitted that they had no idea what they were doing when they started. The argument that personal finance is too technical or too complex is an absurd excuse and a terrible part of all the finance myths. There is a lot of technical parts that need to be calculated, but it is nothing that can’t be learned.
The important thing is not to be overburdened by the details. Look at the easy parts. If one saves $10, they may have $10.50 after a month. If they save $20, they will have $21. There is nothing overly technical about this. The technical parts can come later once a saver begins the habits.
Only People with money care About Personal Finance
A bank account can be opened for $50. That is not a lot. Someone who makes $5 a day can be financially responsible and explore personal finance. This myth is absurd because it assumes that one needs a lot of money to care about their money.
It Can Wait Another Year
There is this fascinating feature in personal finance that involves compound interest. The longer a person saves (and saves smart) the more they can ultimately culminate in continued earnings.
A person who saves the same exact amount every month for 10 years can potentially earn the same amount as a person who saves a lesser amount for only a slightly longer period of time. Compound interest needs to be explained in a diagram, but it essentially shows that compound interest is based on the opposite of waiting.
One of the most intense concerns for anyone is money. It is the leading cause of worry and stress for Canadians over 40. Truthfully, it can’t wait another year. There is right now and today. It does not have to start with extreme personality changes.
A small step here and there can culminate in serious earnings. A couple coins a day to a compound interest account is the right way to go.