Each individual wishes to be financially strong. In order to achieve such a goal, it is necessary to make smart saving and investing decisions.
Quite often, individuals are led to believe certain things that are not true. False pre-conceived notions about saving and investing may hurt your finances in the long run. Following are six myths and the truth about them that you may keep in mind while planning your personal finances.
- Only rich people invest
This is completely a myth. Any individual may save a portion of their earnings and may further invest it. There are numerous investment schemes that allow small investments such as Systematic Investment Plans [SIPs]. Based on your finances, you may begin with a small amount and work your way up by making higher investments over a period of time.
- Cash is king
In this era of digitalization, cash transactions are being replaced by plastic money. You may opt for a debit card or a credit card to make your purchases. You may also use your bank cards to book tickets, make online purchases, to shop at physical stores, and for other purposes. Using plastic money eliminates the risk of theft or loss of cash. Besides, it is a secure and convenient payment method.
- Budgeting is not important
Believing in this myth can result in serious consequences on your finances. It is necessary to determine your cash inflow and outflow. By doing so, you may be able to identify whether your income is sufficient to meet your expenses. If not, you may either consider getting an additional source of income or may cut down on unnecessary expenses.
- Having a saving account is not necessary
Having a saving account helps in building a solid financial future. There are numerous reasons to have such an account such as easy access, the growth of money, a disciplined habit of saving, and low fees, among others. Moreover, you may dip into your account in case you need liquid cash. You may also access funds in your savings account for emergency purposes such as unexpected hospitalization, job loss, or vehicle breakdown, among others. You may choose the most suited account from a plethora of options offered by banks.
- Small purchases are fine
Though you may believe that small purchases will not harm your finances, the same is not true. Making purchases more than you are able to afford will burn a huge hole in your pocket. Instead, you may set a budget and stick to the set amount. This will help reduce unnecessary spending and help you spend wisely.
The road to financial freedom begins with making wise money decisions. You may dispel any money myths that you have and enjoy a strong financial future.