You may not realize it, but you’ve been exposed to false ideas about money that affect how you use it. Check your attitudes about these five money myths to see if you’re on the path to good stewardship.
1. If I buy something on sale, I’m saving money. I recently went to a local drug store to take advantage of a “buy-one-get-one-free” sale. By combining the store promotions with my supply of coupons, I saved more than $50 on products my family always uses, and I wasn’t tempted to buy anything we didn’t need. But my bargain hunting efforts haven’t always worked out so well.
For years my husband and I wasted money on a warehouse membership that resulted in little real savings. Most of the time we either overpaid for products we could have gotten cheaper at our local supermarket, bought things we didn’t need because they seemed like a good deal, or left empty-handed because the store didn’t carry the products we wanted. We finally ditched the warehouse membership and made a commitment to clip coupons every week and compare prices at different stores.
You’ve probably been excited by the thought of saving money when you see items you actually need on sale. But keep in mind that it’s important to compare the unit price to see how much you’re really paying, especially when buying in bulk. Read through the fliers in your local newspaper to find the best deals, and decide if the time and gas you’ll spend visiting more than one store is worth it. If you have a cupboard full of sale items that you never use, then they weren’t really a bargain.
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2. I’ll start saving when I have enough money. “If you’re not responsible and thrifty with a little money, you probably won’t be when you have more of it. Those who are always waiting for a better time to start saving or planning for the future seem to always find an excuse,” says Greg Womack, president of Womack Investment Advisers, Inc., in Edmond, Okla. “I suggest [families] review their current budget for unnecessary spending and put something away. If they set it up with automatic deductions through their checking account or through their 401(k) plan, they may not even miss it.”
3. I have a savings account, so I’m saving money. Having a savings account and using it are two different things. “That’s like someone having a job, but not showing up to work,” says Womack. “You have to actually put money away and have it earning more money to be saving.”
Womack says the amount of savings a person should have depends upon his age and income, but that on average he should save at least 10 percent of his income. “The key is to get in the habit of saving and investing early in life and keep it up; do this and you’ll reduce your financial worries later in life.”
Paying off debts allows you to be free from financial bondage and to make better use of your money.
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4. Debt is normal. According to NationalScoreIndex.com, the average debt on revolving credit accounts and fixed-payment accounts, such as auto loans, was $16,587 in March 2008. The average monthly payment on those debts was $811. Although it sometimes seems as if everyone is doing it, not all of us are carrying loads of credit card debt. According to an American Bankers Association survey, 54 percent of families completely pay off their outstanding balances each month.
Proverbs 22:7 says, “The rich rule over the poor, and the borrower is a slave to the lender” (HCSB). Paying off debts allows you to be free from financial bondage and to make better use of your money. Although it may be tempting to take advantage of all those credit card offers that come your way, you’ll do better in the long run if you only pay for what you can afford.
5. Money is the root of evil. This statement is probably one of the most misquoted verses from the Bible. 1 Timothy 6:10 states: “The love of money is a root of all kinds of evil, and by craving it, some have wandered away from the faith and pierced themselves with many pains” (HCSB). It’s not the money itself that’s the problem, but how people choose to idolize it to the point where they’ll do anything to get it and keep it. It’s tough to live in our society without money, and people who have more of it definitely live more comfortably. But it’s important to remember that the money we earn is a blessing from God, and we should honor Him with how we use it.
Don’t believe everything you hear about money. Use common sense and seek out knowledgeable advisers who can teach you more about improving your finances.
Francine L. Huff is a financial journalist, news editor at the Wall Street Journal, and the author of “The 25-Day Financial Makeover: A Practical Guide for Women.” She and her husband live in New Jersey.