View Full Version : Money Myths
LIST YOUR MONEY MYTHS!
1. Money Equals Happiness
False. Once basic needs are met, money does not increase happiness. Experiences increase happiness.
2. Having Enough Money For Retirement Makes You Safe.
False. Safety is never guaranteed. While having enough money for retirement is important, it is not the end all be all to ensuring a safe and happy end of life.
3. Home Ownership is a Cornerstone to Financial Independence
False. The Rent Vs. Buy Debate has never been resolved. Many individual factors can only answer this question.
4. Paying in Cash is a Cornerstone to Saving Money.
False. The Credit vs. Debit vs. Cash Debate has never been resolved. Many individual factors can only answer this question.
5. Bulking up on sale items saves Money.
False. Many times, this only causes one to spend more money, use more, and waste more. However, in some instances it makes sense based on the individual.
6. The initial cost is never the total cost of the product. Sometimes (often) it is worth spending a little more on what you're buying so the cost of maintenance (fuel/electricity, incidence of repair, the cost of parts, etc.) is reduced.
loosechickens
7-6-12, 11:23pm
The myth that getting something for the lowest price is the best deal. Sometimes the truth is that you didn't even need, and would have been better off without that purchase altogether......and even in the best case, price is only ONE of many considerations when determining value.......like quality, durability, environmental impact and a host of other things apart from price that make something worthwhile, or a "good deal".
The stock market will always revert to the mean rate of growth over the long run.
"Money equals freedom, i.e. more money = more freedom." This is true AND false, depending on what you're doing or have done to get that money. Sometimes having more money means you have to spend more time (and money) protecting it and worrying about losing it. Or it can mean that you're stuck in a job or a community, or even a marriage you hate just to have that money. Only you can decide how you define freedom, and whether money can actually purchase it.
Decide in a rush because the great deal will get away or the 0% interest is the best if you buy now.
Decide in a rush because the great deal will get away or the 0% interest is the best if you buy now.
We are car shopping for my wife this week, (yes, brand new) and 0% vs. market rate interest is within $300 of being a wash.
"Today's money is money"
https://lh6.googleusercontent.com/-fIlpEVVvNgo/Tl14E3ttScI/AAAAAAAADys/yj7AabuQk1E/s576/IMG_2700.JPG
http://www.pearlegg.com/10_silver%20certificate.jpg
"Spend more and save more!"
You will always have debt.
The concept of "good debt."
flowerseverywhere
7-7-12, 2:27pm
don't pay off your house because you can deduct the interest payments on your taxes. Again, a very individual decision based not only on money but on personal level of comfort.
Student loan debt is good debt. Not necessarily. It may be good or it may be horrendous depending on the individual.
Any statement starting with "Everybody..."
(Everybody does it...Everybody says it...)
"Today's money is money"
https://lh6.googleusercontent.com/-fIlpEVVvNgo/Tl14E3ttScI/AAAAAAAADys/yj7AabuQk1E/s576/IMG_2700.JPG
http://www.pearlegg.com/10_silver%20certificate.jpg
+1
The standard definition of money is three things: 1) a medium of exchange, 2) a unit of account, 3) a store of value. One only need to spend a few minutes playing with the inflation calculator on the federal reserve's website to realize that the dollar only meets two out of three parts to the definition.
LIST YOUR MONEY MYTHS!
4. Paying in Cash is a Cornerstone to Saving Money.
False. The Credit vs. Debit vs. Cash Debate has never been resolved. Many individual factors can only answer this question.
Kind of surprised to read this. By coincidence last week I was reading a book (Brain Trust) where the author checked out many self improvement approaches by interviewing well known scientists who had tested them. One of the people he interviewed was a scientist (sorry don't have the book in front of me and don't remember the name) who tested this premise and found that people did in fact spend less when paying cash. A quick google search turns up studies by MIT and Carnegie Mellon supporting this premise as well as the internal studies of McDonalds when they started accepting credit cards.
If you think the studies are unpersuasive or counterbalanced by other studies of the same magnitude and repute that is one thing. However I don't see how you can label something that has been supported by extensive independent empirical research to be simply a myth.
Speaking for myself, I definitely seem to spend less when using cash as opposed to a debit or credit card.
What evidence have you seen that makes you feel that this is a mere myth?
Gardenarian
7-9-12, 12:12pm
"I can always return it." (If I remember to hold on to the receipt, and if I return it within the specified time. This one has come back to bite me a few times.)
Kind of surprised to read this. By coincidence last week I was reading a book (Brain Trust) where the author checked out many self improvement approaches by interviewing well known scientists who had tested them. One of the people he interviewed was a scientist (sorry don't have the book in front of me and don't remember the name) who tested this premise and found that people did in fact spend less when paying cash. A quick google search turns up studies by MIT and Carnegie Mellon supporting this premise as well as the internal studies of McDonalds when they started accepting credit cards.
If you think the studies are unpersuasive or counterbalanced by other studies of the same magnitude and repute that is one thing. However I don't see how you can label something that has been supported by extensive independent empirical research to be simply a myth.
Speaking for myself, I definitely seem to spend less when using cash as opposed to a debit or credit card.
What evidence have you seen that makes you feel that this is a mere myth?
one plus!! I also spend less when I use cash - for the mere fact that I only have a limited amount on me at any given time and therefore can't spend more than that amount. And knowing that I would have to go to an ATM to get more, I budget the cash I do have so that it covers what I need as I don't want to have to hassle getting more just because I bought some "impulse" items. Where as with a debit card, even a check, you have access to your entire bank account and nothing - other than your will power - to limit you from overspending. Also, I personally believe it is MUCH harder to part with cold, hard cash then to just scan a card. It seems more real for some reason. the same is true for the use of credit. For example, I believe it is much harder to part with cash to buy a vehicle outright then it is to buy it on credit. Those small monthly payments seem to be OK for most people, even for an expensive car. But if you asked them to go write a check or pay cash for the entire amount of the vehicle many will swoon at that amount and probably opt to buy a less expensive car if they had to pay cash. While making a $400/month payment for a $30K car seems Ok to most people, withdrawing $30K in cash in a lump and handing it over to a car dealer would make most people cringe. Cash seems more real - and the impact of spending alot of it can often make people reassess their buying habits. Imagine if more people had to shell out cash when they buy houses? Probably be alot less McMansions out there and more people in tiny, low cost homes they could afford!
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