11 Money Myths That Stand In The Way Of Your Success


source: news.stanford.edu

Our personal money management often falls into the “tomorrow is another day” denial space, says Nigel Willmott, head of employee benefits at financial services firm, Citadel.

Many of us don’t take our personal financial health seriously enough. We often just get by and don’t look to improve our personal money habits and or prioritise our goals, Willmott said.

Do you fear money – or the lack of it?

Many of us have various (and at times, contradictory) phobias about money: we fear not having enough but we also dread and put off the necessary actions to prevent this from happening, said Willmott said.

“Consider that financial failure and success doesn’t happen randomly. These outcomes are the direct results of good and bad decisions and disciplined financial habits. Financial freedom is achieved by having a sound financial plan or a road map and sticking to it over the long term.”

Do you believe the money myths?

Many of us grow up believing various myths about money, to the detriment of our potential financial success, Willmott said.

Some of these include:

  1. If you earn more you will be rich
  2. My partner will always take care of me
  3. Inflation is not a significant problem
  4. Women are not good with numbers
  5. Money can’t buy happiness (neither can poverty)
  6. If you work hard you will be rewarded financially
  7. Having money means having fewer worries
  8. Financial matters are too complicated to understand
  9. Financial planning should be left to the experts
  10. Credit makes purchasing easy
  11. Money is the best indicator of success
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These are just myths. By taking control of your finances, you can work towards a comfortable retirement, irrespective of your family history or earning potential, the financial expert said.

Can you set achievable financial goals?

Do you have achievable short, medium and long term financial goals? By aligning these with your personal spending plan, you will be able to build a solid capital base for retirement. Be sure your financial goals are achievable and stick to your financial plan. Make a point of sitting down each year to reassesses these goals, Willmott said.

Have you considered hiring a financial advisor?

Have you ever thought of hiring a financial guide? If you do wish to, ask your potential financial guide the following questions:

  • Are you suitably qualified and what type of advice are you licensed to dispense?
  • Are you an independent advisor or are you a tied agent?
  • Which institutions do you prefer to use and why?
  • What type of remuneration do you prefer: commission or fee-based?

Do you spend according to a financial plan?

One of the first steps to sound personal financial management is preparing a spending plan or budget. Break the budget up as follows:

  • Income
  • Fixed Expenses
  • Variable Expenses
  • Discretionary Expenses

Be honest with yourself: don’t ignore those “guilty pleasure” expenses, budget for them. For a month, record each purchase, then reconcile your monthly expenses and bank statement to your spending plan and adjust and improve it where necessary.

What is your attitude to debt?

There are two types of debt: “good debt” and “bad debt”. Good debt – such as a mortgage or a car loan – should provide a positive return in time.

An investment in a house can provide a positive return over time should you add value to the property through cost-effective upgrades or property prices in the area increase; the purchase of a car enables you to be economically active and earn a return on the investment in that way, Willmott said.

Problems arise when we overextend ourselves and abuse “bad debt”, which is often short-term debt used to fund a lifestyle as opposed to purchase an asset that could appreciate. Items such as clothing, gadgets, holidays, expensive gifts and other consumables of little lasting value are the main culprits for the rising tide of bad debt across society, the expert said.







Source: Business Tech

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