3 Money Myths That Are Draining Your Wallet

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Money: it’s often the largest factor for so many decisions we make on a daily basis. Keeping tabs on your daily, weekly, monthly and yearly spending habits can be the deciding factor between a life of thriving and starving.

Money Myths That Are Draining Your Wallet

But in a world where vast amounts of information is always at your fingertips, it’s easy to be thrown off by well-meaning (or not) money tips. Here are three, well-meaning, but misguided money tips.

myths that are draining your walletMyth #1: It’s Ok to Start with an Entry-Level Salary

You’ve worked hard to be where you are. You’ve had specialized training, probably a few internships and a proven ability to succeed in the position you’re applying for. The old “pay your dues” concept is a thing of the past and it should be left there.

Don’t be afraid to ask for more during hiring negotiations. Oftentimes an employer has the ability to offer more and is looking for a sign of initiative. And remember, you’ve probably put in hours of time in schooling alone to get to this point. So, sure, $20/hour may seem good but you’ve likely spent four years getting to that point. Four years at $0/hour. Don’t you deserve more now that you’re ready to let an employer utilize your skills?

For freelancers, especially new ones, getting a new gig is exciting and can feel like Christmas. But don’t say yes to the first offer on the table. Again, you know what you’re skill set is and how valuable that could be to a potential employer. Many people are timid about getting a first job but you shouldn’t be one of them. Be bold.

Myth #2: You Have to Save a Lot Before You Can Invest

Of all the money myths that are draining your wallet, this one can often mislead people the most. Investing can be a scary concept. Brokers spend their entire lives studying the system, moving millions of dollars with a call or a click of a button. It makes us think we need to be millionaires before entering the market and saving for our future.

Although the market is a risk, it can be an even bigger risk not to enter the market. Most savings accounts don’t offer more than 1 percent interest rate and your hard-earning money is just sitting there. A lot of times, you can start small with low-risk investments using apps like Acorn. Do a little research and see where your money could be making you money.

You don’t need to have ‘made it’ before you invest. In fact, investing is how most people make it. Once you’ve established your emergency fund, dive into the world of investing.

myths that are draining your walletMyth #3: Paying off Student Loans Should Be a Top Priority

When that first student loan bill comes and it’s more than all your monthly bills combined, it can be tempting to want to pay that down first—and if you have the means to do so, great. I actually did this when I graduated. It was okay to do but I wouldn’t have minded keeping the debt. In fact, I would’ve been better off financially to have kept it. Interest was something like 4% and my investment portfolio has been doing 10%+… (Derek’s note: investing involves risk and is not always a better decision).

But student loans are what many consider “necessary debt” or “good debt.” It’s a low-interest long-term loan that can be paid off incrementally as your build your professional career. Many times we focus on the biggest loans while putting off saving or paying off smaller, higher-interest loans like auto and credit cards.

Getting out of debt, good or bad, should always be a priority. But make a plan that addresses the highest interest rates and attack each one at a time, snowballing your payments until you hit the big ones. Paying off bad debt and high-interest debt mathematically makes sense. There is absolutely no arguing the point. Sure, you can use the snowball method but that’s really only necessary if you decide not to control your emotions and focus on logic. If you want to win with money, it takes logic.

Money doesn’t have to be complicated and it certainly shouldn’t control your life. The first step to financial peace of mind is deciding what’s important to you, what your goals are and how to plan to reach them. Then focus on the important parts of life, like your career, spending time with family and friends and enjoying the life you’re building for yourself.

Money should always follow, it should never lead.

This article was written by our long-time staff writer, Will Lipovsky.

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4 comments to 3 Money Myths That Are Draining Your Wallet

  • whiskey

    While respect is given to the writer, I think this one is way off base.
    1-old “pay your dues” concept is a thing of the past” — I call BS on this one. If you come aboard my “ship” you will pay your dues! Nobody jumps on and becomes the team lead or senior tech etc. Puhleeez! My job is to make you the best tech while taking care of the customers. Some need only a little help, some need and get to be fired.
    2-At least he stated that you need to have an emergency fund,,,,, at the end of the article
    3-Once again, debt is bad, period. Writers often want to say “I could’ve earned 10% or 15% etc and kept the 4% netting me 6 or 11% and in the long run be better off”. Once again, get serious. It looks good on paper but life happens. And that debt can stay over your head for a long time, causing a lot of regret down the road. Better to pay it off now, then move forward.
    Thats my two bits

    • Hi Whiskey. You’re pretty tough on Will this time! I’m with you on some of your points though. I’m not a big fan of taking on low interest debt to supposedly earn more in the stock market. Sure, the track record is there to earn more, but there’s definite risk there! I’m a no-debt guy for the rest of my life, and I always suggest the same for everyone else.

  • I think entry level often has to be put in perspective. When I was hired in at my job out of college, I made money on the bottom end of the scale, for the simple reason that I was working alongside people that had experience, sometimes up to 10 years. Within a year, I was promoted and got a bigger raise than they did, but I had little problem at least for the first few months proving myself and proving that I deserved just as much as the others. I hope that people who realize understand that there might be good reasons that they might make less, and not take this as advice to ask for more than might be considered reasonable.
    Money Beagle recently posted..Stockpiling Works For Us (At Least For Now)

    • Kids today expect to earn $50k+ out of college. Sometimes, that just doesn’t happen, and that’s okay, as long as there are plenty of opportunities to move up in the company.

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