When it comes to the money game, everybody has an opinion.
For many millennials, our understanding of money is shaped at a young age. Just how young? Research actually suggests it’s as early as three years old. Some of us think money exists to be earned and spent quickly. Others hoard it. Despite different ways of interacting with money, we can all agree that much about personal finance is just that: deeply personal. Regardless of where you stand, there are plenty of financial falsehoods that exist, and I want to take some time to debunk them.
MYTH #1: I can’t invest ‘cause I’m not rich
The first myth is that you need to be wealthy to invest. While it’s true that you need at least some money in order to invest, this can still be a small quantity. Even a few dollars here and there really add up. When it comes to investing, you need not wait for the future. You can start doing research today and get started tomorrow. Where do you start? Check out these investment tips for millennials.
MYTH #2: Banks are the best place to store my money
The second myth is tied to investing and where we store our money. For many of my millennial friends, money is stored in the bank. This can be a bad idea! While banks can provide great services and products they can also act like glorified mattresses: money that is placed in them depreciates with time. When thinking about where to place money, think about where that money will work for you. If your money is stagnant or not invested, it is not working for you. Is opening a bank account the best option for your child?
MYTH #3: I can get rich by not spending
The third myth is that one can get wealthy simply by spending less. While saving money is crucial, it is also very important to have an income that grows. The real key to wealth is earning more money. Marcia Duffy of Bankrate argues that “unfortunately, if you are making $50,000 per year, it will be nearly impossible to accumulate large sums of money, even if you save all your extra pennies. People need to stop looking at the expenses portion of their budget. It is usually the shortage of income that gets people into trouble. Fortunes can be created almost overnight, if you have the right idea at the right time. Many middle-class money woes don’t stem from big spending, but from not enough income being generated by members of the household.”
MYTH #4: Using a credit card is dangerous
The fourth myth is that paying for things with cash is always the way to keep spending in check. Credit cards have risks but can also unlock new potential for consumers, when leveraged thoughtfully. After
acquiring my first credit card, I was taught how to use it responsibly and feared overages, fees, and hidden costs. When used prudently, credit cards are powerful tools. I have flown round-trip to a foreign country for free just because of points accumulated through thoughtful, necessary purchases. Credit cards are tools and if you know how to use a tool it can be a lifestyle enhancer. Check out these top tips for credit card beginners.
Myth #5: Learning about money is not important, it’ll come to me with time
The fifth myth is that teaching millennials about money, savings, and work is not important. Millennials need
to learn about money and few states in the U.S. include this in school curriculum today. Learning about money can’t wait, as it matters a great deal and plays a central role in many aspects of our lives. As Steve Jobs reminds us “work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work.” Work is hard and require patience, time, and commitment. Without work, and by extension effort, other financial concepts seemingly fall away.
By breaking down financial myths you not only empower yourself, but you empower your friends and the millennials you interact with. We need a financial revolution – in which young folks are educated about money and are empowered to spend funds thoughtfully and impactfully. If you strive for financial success, myths about money must be debunked today.
By earning more money, reducing costs, and thinking about sustainable investments, you will be well on your way. And that is a good place to be.