Malaysia

8 big lies people believe about money

Comforting little untruths can have dire financial consequences. (Pixabay pic)

Turning a blind eye to financial issues and problems, or lying to yourself about them, can only work for a short while.

The financial crisis will remain unfixed, problems will continue to mount and, eventually will have to be dealt with in one go.

It is better to confront even the tiniest issues – from that RM20 owed to a friend to student loan debt – before it is too late.

Here are the eight biggest financial lies women tell themselves and why it has to stop.

1. Only the rich and privileged can make it on their own

LIE: Fresh graduates tend to think it will take years if not decades to save a substantial amount. Some who have been stuck in a job for a long time might start thinking the same, too.

STOP: Firstly, this is akin to admitting defeat before even trying. Secondly, while one’s social status and privileges do affect one’s future, to say that all those with nothing or little can get nowhere is false. The rags-to-riches stories of JK Rowling and Oprah Winfrey are enough proof for this.

2. I’m still young and have lots of time to save

LIE: The real reason is because one is actually young and wants to enjoy their money now rather than later, or they are in denial of the progression of time and their current financial state.

STOP: It’s basic maths – starting to save earlier garners more funds for the future and retirement. No matter how stable one’s current career and financial state are, the future is never truly certain; so it is better to be prepared and save in case something unexpected crops up.

3. A savings account is good enough

LIE: Those you believe that a savings account is all they need are actually harbouring a fear of investing. Besides, it is called a savings account for a reason.

STOP: Most savings accounts pay low interest, which often does not cover inflation. This results in the value of the cash in the account decreasing over time.

It is best to postpone luxuries and live within one’s means – save up for those expensive rewards. (Pixabay pic)

4. I have retirement savings

LIE: Many believe that since retirement savings take a chunk off their paycheques that surely it will pay off in the future, right? Wrong.

STOP: Sadly, Employees Provident Fund savings often do not provide retirees sufficient with funds to cover all their needs until the end.

Other savings, under a lifelong retirement plan, will be needed and the amount will depend on how the plan was followed, especially in the case of events like inflation, higher taxes, children’s financial troubles or other unexpected events.

5. Investing is risky and complicated

LIE: Different investments have their own risks as well as their own jargon that might scare off those who plan on trying them out.

STOP: It is true that there are risks, but if someone trains themselves to be patient enough to research and study the movement of the stock market, it can pay off significantly in the end. Consider starting a business. The point is, do not let fear get in the way.

6. Borrow from savings, then make up for it next month

LIE: Many believe that if one can lend money to others and trust it will be returned, why not lend money to oneself?

STOP: Trying to make up for borrowed money might require sacrifices involving lifestyle changes. If an individual is thinking of spending on something that requires a portion of one’s savings, it is probably beyond one’s means.

7. I’ll pay my debts when I’m earning more money

LIE: Many people falsely believe that there must be something greater in store for their career in the future.

STOP: The possibility of getting a raise, being promoted, or a job that pays better is there, but it’s not certain. Do not rely on a possibility.

To ensure the future, take actions that can help lessen future financial problems – pay debts on time and while one is earning.

8. I deserve expensive stuff for all my hard work. That’s what credit cards are for.

LIE: Many people talk themselves into believing that it’s justifiable to reward themselves for all their hard work. And the credit card is right there, and can be paid off later.

STOP: While one does deserve to enjoy one’s hard-earned wealth, don’t spend extravagantly. Buy that new phone by all means, but not before keeping aside part of your monthly earnings for a year so the purchase can be paid for in full without touching your savings or using a credit card.

Credit cards give many the illusion of having more money than they actually have. Some even claim credit cards are capitalists’ tool to make people spend way beyond their purchasing power.

While these lies do make one feel better and lessen the anxiety for the future, the time will come when one cannot run away from these problems anymore.

So why not save one’s future self the trouble and plan ahead – budget and spend wisely and fix what can be fixed early on.

This article first appeared in The New Savvy

The New Savvy is Asia’s leading financial, investments and career platform for women. Our bold vision is to empower 100 million women to achieve financial happiness. We deliver high-quality content through conferences, e-learning platforms, personal finance apps and e-commerce stores.

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