For the longest time, I thought cheaper was always better. As a graduate student living on an extremely tight budget, this money myth was really handy. I cut coupons, checked the unit price on items in the grocery store, and ordered the least expensive meal when I went out with friends. Frugality was my motto, and I refused to deviate.
This myth helped keep my bank account in check, but it also held me back from trying new experiences. Then, about six months into my first full-time job, I wanted to buy theater tickets to celebrate my now-husband’s graduation from art school. When I asked my boss (and fellow theater lover) for advice, he said, “My wife and I often ask ourselves: ‘Would an extra $10 per ticket allow us to sit closer and enjoy the show that much more?’ In most cases, we’ve found that paying more is worth it because that little upcharge really enhances our experience.”
I decided to splurge and buy tickets in row three. It was worth every extra penny. I learned that cheaper isn’t always better, in the same way that the pricier option isn’t always better. It depends on the experience. Since then, we’ve let our values guide where we splurge and where we save.
As the calendar flips to Apr. 1, I encourage you not to be fooled by these common money myths:
“The stock market is tanking … it’s time to sell my investments and get out before things get any worse.” How many times have you heard this myth since the market took a nose dive a few weeks ago? I get it — people are scared. They think, “If I get out now, I can cut my losses.” But part of investing your money in the stock market means riding the roller coaster with its glorious ups and terrifying downs. The reason most of us have our “long-term” savings money in the stock market is because over time, it can result in bigger gains than you can get from any other investment opportunity. In these tumultuous times, it’s good to remember that since 2009 the stock market has experienced one of its best runs ever.
Tip: Feeling a bit queasy after the recent dips? That’s understandable. If possible, turn down the market noise and ignore your account for a while. Worried you’re not invested in the right place? Now isn’t the time to make rash decisions. Instead, make an appointment with your financial planner or give the company where your money is invested a call. Check in on your risk tolerance to see if you’re exposing yourself to more risk than you can handle and gradually make the changes needed with the help of a professional.
“The only way to balance my budget is to cut spending.” So often people living above their means assume the only way to remedy the problem is to cut things they enjoy — no more eating out, no more Netflix, no more concert tickets. While trimming back things that don’t provide much value can be helpful, it is just as helpful to balance your budget by bringing in more income. A side hustle might be enough if you’re just trying to cover discretionary spending like travel. If you’re looking to more permanently fund your lifestyle, you’ll want to find a steadier income source.
Tip: Do your research and see if your job is paying you equitably. If not, you may want to ask for a raise or other additional benefits once the economy is in a little better place.
“I have enough in my account to cover my expenses, so I don’t need to budget.” Budgets aren’t just for people who overspend, they are for anyone who wants to be more planful with their money. I started budgeting because I was living on a shoestring, but I have continued the practice over the last ten years because I saw how it really helped me align my money with my values.
Tip: Budgets come in all shapes and sizes. If you tried budgeting before and it didn’t work for you, try again using a different method. There are countless apps, spreadsheets, and even good ole’ pen and paper to choose from.
“You’re better off having the same money personality as your spouse.” Makes sense, right? You’re both spenders, so you enjoy taking full advantage of the money you have today. Or, you’re both givers, focused on taking care of others. Having the same money personality can make talking about money easier because you’re coming from a similar perspective. However, double the strengths also means double the blind spots.
Tip: It’s important that you find the right financial balance in your relationship so you’re not over-weighted in one area. You can do this by leaning into your secondary money personalities and/or finding a role model for the qualities you lack who can inspire you to infuse more of that personality into your financial life.
“Smart financial people never spend money on lattes or avocado toast.” In other words, on things other people perceive as frivolous. This is flat out wrong. One of my favorite things to spend money on is treats from a local bakery. So many people would see this as a waste of money and calories — and yet, it brings me so much joy. The truth is, smart financial people don’t spend money mindlessly. They are choosy with their money, making sure it’s going toward things they value. They also ensure that little luxuries don’t get in the way of their larger goals, so they can indulge guilt-free.
Tip: When you hear financial experts harping about small habits, I encourage you to ask yourself two questions in response: “Are my larger goals on track?” and “Do these small luxuries bring me joy?” If the answers are “yes,” then forget the rest. Guilt has never been a good, lasting motivator for anyone.
What other financial myths have you encountered? Let me know below!
In response to the ongoing coronavirus pandemic, I’m offering free access to my favorite money dates from my Date Night Club. I hope these casual, insightful, and even fun series of questions and activities can help you and your partner get on the same page about where you are and where you want to be. I guarantee you it will be an hour well-spent.
P.S. Ready to take your financial skills to the next level this year from the comfort of your own home? Join my friend Michelle Boss — The Money Boss — for her 2020 MasterClass. Through teaching and accountability calls, working sessions, and countless tools, she will help you create a thriving financial life. Find out more in my recent blog post.