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Money Myths

dollar-941246_640 (2)When I was young, I believed the Tooth Fairy put money under my pillow, Santa put the toys under the tree and the Easter Bunny put the candy in the basket. As an adult, I don’t believe in the Tooth Fairy, Santa or the Easter Bunny, and you probably don’t either. But you may believe some money myths.

There are many timeless truths about money—most of them originating in the Bible—and there are nearly as many myths about money as there are truths. Listed below are some Money Myths and the real truth:

If I only had more money, then I’d be happy.
Happiness is a state of mind. Ecclesiastes tells us about the foolishness of thinking that wealth brings happiness. If you aren’t happy with what you have, you’ll never be happy with what you get.

The mortgage interest deduction is a huge tax advantage so I never want to pay off the mortgage.
This is just bad math. The amount of interest paid on your mortgage reduces the amount of tax you owe based on your tax bracket. You aren’t getting money back; you are getting a tax deduction. Sure the deduction helps decrease your taxes, but you are paying way more in interest than you’ll ever get back on your taxes.

I don’t make enough to save.
The truth is, almost everyone can cut expenses enough to tuck away a few dollars a week. It just takes discipline and practice. People who make little HAVE to save or else you’ll end up digging an even deeper hole by having to use credit cards, payday loans or title loans every time an unplanned expense comes a long.

I don’t make enough to give.
This goes along with not having enough to save. Giving to God comes from your first fruits – before you have a chance to spend it on something that is not important. If you aren’t giving, start giving with an open heart and see what happens.

I don’t make enough to budget.
The less a person earns the more important it is to budget. Flying by the seat of your financial pants often means you spend more than you make. Everyone needs a budget, which is simply a way to allocate money to the things that are most important to you and your family.

A raise will cost you money if it moves you into a higher tax bracket. Actually, the higher tax rate only applies to the increase, not your whole salary, so you’ll net more money with a raise, even in a higher bracket.

Renting is just throwing money in the trash.

That’s wrong, too. Housing is a necessary expense, just like transportation and food. That myth got started back when property values rose continuously, so when you bought a house, it always appreciated. If you are going to be in a location for a short time, renting makes more sense, as you can rent less expensively than buying. If you’ll be moving soon, renting avoids the closing costs and realtor fees associated with buying a house.

You get what you pay for.
People say this all the time to justify spending. Actually, there are plenty of expensive things out there of questionable value, such as brand-name drugs, which cost 2 or 3 times more than generic, but are rarely more effective. Another example is tests done on cosmetics to see if the more expensive ones were better than the drugstore brand. They weren’t. Google “generic vs expensive cosmetics” to see the details of many different investigations of this subject.

The stock market is going down I have to sell.
Or, the market is soaring, I have to buy.
That’s exactly backward. The best time to buy stocks or mutual funds is when prices are low. The best time to sell is when prices are high. Your investment horizon (that’s the period of time before you need the money) should be far enough in the future so that you can ride out downturns in the market. If it’s not, you need to invest in something that has less risk.

The more money you make the richer you are.
Wrong! Just because someone has a 6-figure salary does not mean they are managing it well. The more people earn, the more they tend to spend. How many lottery winners go bankrupt? Sixty percent of NBA athletes are broke within 5 years of leaving pro sports. It’s not how much you make; it’s how well you manage what you make.

It’s easy to minimize credit card costs with 0% offers
If using a zero percent interest card is part of your strategy to pay off your credit cards, it may be a great idea. But just shuffling your debt around by opening and closing credit card accounts can hurt your credit score, which can lead to higher interest rates down the road

Carrying a balance on your credit card boosts your credit rating.
In truth, the best way to improve your credit score is to pay your credit card off every month in full.

It’s more spiritual to be poor.
In the Bible we find people who love and follow Jesus with all their heart at every economic level. We are not required to be poor nor are we promised riches. God’s people are called to be faithful whether they have much or little.

I don’t need a will because I’m leaving everything to my spouse.
There could still be probate costs and challenges from children and other relatives if you don’t have a will. And no will means the state in which you live decides how to distribute your assets. What if you and your spouse die together? Who will be the guardian of your children? Every adult should have a will.

So Tooth Fairy, Santa, and the Easter Bunny are not real, and neither are these money myths!

“The way of fools is right in their own eyes, but those who listen to advice are the wise.” Proverbs 12:15

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