Myth 1: A penny saved is a penny earnedIt’s easy to think that spending $50 less each week leaves you in the same position as earning $50 more.
Myth 1: A penny saved is a penny earned
It’s easy to think that spending $50 less each week leaves you in the same position as earning $50 more. In reality, saving is often a much more powerful way to get ahead than earning more. As you earn more, your tax rate increases. And the more you buy, the more GST you pay. A penny saved is worth much more than a penny earned!
Myth 2: You can scrimp your way to success
Although a dollar saved beats a dollar earned, it’s also worth remembering that you can only scrimp and save so much. Making dinner at home is necessary, but not sufficient, to buy your dream home! Increasing your earning potential is crucial to long term financial success.
Myth 3: Student loans will hold you back
Unless you’re heading on a big OE, it’s a bad idea to make voluntary payments on your student loans. Student loans are interest free, so you’re much better using any extra money to pay off interest-bearing debt, to invest or to save for that first home deposit.
Myth 4: Interest free deals are interest free
Interest free finance often sounds like a great way to make large purchases happen. In reality, the setup and account fees that in-store financiers may charge often means it's cheaper to use a personal loan.
Myth 5: You have to earn a lot to save
We tend to spend whatever we have available, particularly if money’s tight. You don’t have to earn a six figure salary to save. The most important thing is to commit to putting aside some savings before you spend on anything else.
Myth 6: People who look rich are wealthy
High income earners don’t always have a high net worth. The real estate agent with the flash European car often has less tucked away than the builder who drives a Hiace.
Myth 7: Credit cards are a good alternative to an emergency fund
Putting it on the plastic can be a convenient way to cover emergency expenses that need to be paid then and there, but it’s important to back this up with a small emergency fund to avoid your credit card debt getting out of control.
The best way to bust financial myths is to escape the echo-chamber and read widely. If you’re looking to improve how you manage your money, sign up to our Making it Happen newsletter for a fresh take on personal finance. We’ll show you the best ways to get inspired and make your dreams happen today.
