Personal Finance: Popular Myths.

Let’s play a little game to get us going this Monday morning to get our brains fired up and working. Here are a few questions to get you started:

Which is heavier; a kilo of rice or a kilo of feathers?

Second, I have no brothers or sisters, but this man’s father is my father’s son. Who am I looking at? Okay, have you gotten your answers?

Well, I’ll tell you in the next post. Now that we are all warmed up, let’s fish out the finance myths we have flying around.

  1. Using Cash is better than using Credit Cards to Track your Expenses: Although spending definite amounts of cash works for people as it helps curb their spending habits, it’s more efficient to keep track of your expenses using credit or debit cards purchases. Also on the plus side, it is easier to get your money lost when you make purchases with a credit card (when insured) rather than when cash is stolen from you.
  2. Only Rich People Need a Will: *buzz* Wrong again. Yes, you may be thinking since you don’t have much assets or finances “what do I have that I need a will for? Well, everyone needs a last will and testament. Dying without a will allows room for complete strangers decide how to split up your estate and raise your children. When you have a written will, the court gives first dibs to a spouse and children, followed by other relatives. In absence of a family, your property goes to the state and unless you appoint a guardian for your minor kids, their future will be determined by the court.
  3. More Earnings means more Wealth: The more people earn, the more they tend to spend,” says Stephen Goldbart; and as people acquire more money, they begin to buy things they always wanted or desired thereby making them spend more. This is why rich people go bankrupt as they aren’t conscious as consumers. If you don’t need it, don’t spend money on it. If it’s not adding value to your dreams and goals, then why buy it
  4. Money Can’t Buy Happiness: Do I hear laughter in the background? Yeah. Money can buy happiness on the contrary as money is correlated to happiness especially for low and middle income earners. An increase in salary and earnings will produce happiness in anyone. Imagine if you were earning 100,000 naira and you were told that your salary has been increased to 150,000 naira, how will you feel hearing that? Sad? Of course not! So, inasmuch as it may not be the main factor, money does buy happiness. It’s up to you to stay happy.
  5. You should start Saving for Retirement at Age 40: Like, duh! Of course right? Wrong. Young people think retirement age is far away- and they are right. However, your retirement fund also takes lots of time to grow. For instance, if you start saving 100,000 yearly from age 20 until retirement age (supposing you retire at age 60) in a fund earning 7% interest annually, you will have a nest egg of more than 1.3 million when you retire. That doesn’t sound like much right? Now imagine if you wait till you’re age 40 to start saving, what do you get at age 60? Don’t let time fool you, and start building your retirement fund now.

Well, there you go.

Do have a lovely Monday and a great week ahead.

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