10 Personal finance myths Busted

This video is for everyone that wants to get their finances straight. Here's the thing, I've been surfing online for a while, and I know a lot of personal finance channels, so-called financial advisors, that are trying to tell you how to manage your money, and so on. Do this, spend this much here, invest in this stock here, and so on. Reality is, you can't really assign a percentage of spending to all people. We're all in different situations, different chapters of our lives, and we all have different goals. So, you can't really tell everyone to do the same. That just doesn't work. There are so many false beliefs when it comes to money. Some people think that it's somehow evil, some think that it isn't important, and some think that you have to stay away from debt at all costs. This is all wrong, and today, I'm going to take 10 of the most common personal finance myths, and bust them, one by one. Let's get started. But before we do, don't forget to like and subscribe. Myth 1. Debt is dangerous, and you should avoid it at all costs You've heard this many times, I'm sure of it. Stay away from all forms of debt, because you'll never know if you're really going to be able to pay it back. That's good advice for undisciplined and uneducated people. If you know how to use and manage your money, you know how to use debt in a powerful way. I'm obviously not talking about medical debt or student loan debts, those are usually a huge burden for American families. I'm talking about business loans, credit card debts, and so on. Business Loans In the world of business, we have two kinds of people. Those who strongly disagree with the use of debt to start, buy, or invest into business. They believe that you should use your own money to start the venture. And those who strongly disagree with using your own money, and instead, you should risk the bank's money. I'm not going to take a final stand here, but I do want to say this. Are you really going to save up all the money to start your business? If we're talking about micro-businesses, you can do that. According to the U.S. Administration of Small Businesses, it takes around $3,000 to $5,000 to start one. But a micro-business is no better than a job, doesn't give you what entrepreneurship promises. To start a proper business, it takes dozens and dozens of thousands of dollars, sometimes hundreds, sometimes even millions. If you have a valuable idea and a good plan, it would be a shame to let it go by simply because it would take you 20 years to save the money to get started. I'll let you decide for yourself, but if you're going to use it cleverly, loans are a great way to start, buy, or invest in the expansion of a business. Credit Cards Credit cards are a heaven-sent and the devil among most people. Some people stay away from it even if they're in an emergency situation. They're almost afraid of it. If you're one of them, you shouldn't be. Credit cards are a powerful weapon that can help you on a day-to-day basis, and as long as you don't overspend and stay disciplined, you should be able to pay it off every single month. On the other hand, if you're not confident about your money enough to use a credit card, you probably should get educated before running away from it. But credit cards aren't just a good tool to get out of an emergency or use money when you need it but don't have it. Credit cards also build your credit score. This is one of the metrics that banks will use if one day you're going to need a loan, a mortgage, or something similar. Credit cards help you build your credit score, which is your reputation and credibility from a financial point of view. Myth 2. Buying a home is a dream come true. False. That's not the case anymore. For a long time, getting a house was the American dream. It was the goal in life for most people. But in 2021, that's not the case anymore. It really depends on what you want from life. Maybe you don't even need to rent one. Maybe you would be much happier in an apartment or maybe traveling all the time with no real stability. It's totally up to you. But pushing this on everyone is deeply wrong. You should do what you want to do. In a time like this, having a home might even be a handicap. You should use them just like you use hotels. When you're done with them, you move on to the next one. Don't buy a home just because everyone tells you that it's the right thing to do. Look at what you want in life and decide for yourself if it's a great option or not. It's all about you. Myth 3. Gold and other metals are safe havens. A safe haven in investing is an investment that might save you during times of crisis or inflation. In fact, since the coronavirus pandemic started in 2020, people started putting all their savings in gold, silver, or other metals, thinking it'll save them from crisis or inflation. Well, there are two reasons why this is not the case. 1. During a crisis, cash is king. Having money in the bank during unpredictable times is peace of mind you should want. You never know what happens. If you have a job, you might be laid off. If you have a business, you might have to turn in the key, shut it down. Or maybe you'll need some cash to pay employees or to invest in something that will help you survive. If you have all your funds in some metal, you aren't liquid, which is a huge risk during a crisis like this one. 2. They aren't actual safe havens. Let me tell you the truth here. Financial safe havens do not exist. They just don't. It's proven that gold and other metals will not save you from inflation. The price of gold fluctuates too, and if you look long-term, the price of gold is very volatile. Take a look at this example here. The graph is from goldprice.org. If you bought gold in 2001 and sold it in 2010, that would have been great, and you would have made huge profits. But if you would have bought gold in 2012 and then sold it in 2016, you would have lost your money. And just by taking a look at this graph, you can easily understand that gold price isn't as stable as people want you to believe, and it definitely isn't as predictable. Myth 4. Bitcoin is a safe haven. For the same reasons why gold isn't a safe haven, Bitcoin also isn't. There are a lot of people who make money with it, and a lot who lost a lot of money. I'm not saying that you shouldn't invest in Bitcoin. If you're willing to study it and understand how it works, you go ahead. But just a heads up, it's extremely complicated. But if you think that putting your money in Bitcoin will magically save you from inflation, think again. Myth 5. Anyone can start trading or investing. I know that internet marketers and gurus are telling you the opposite. Truth is, investing is a really complicated profession. I'm not saying you can't learn how to do it, but if you expect to become rich with it in a matter of months, you're wrong. There are people who did become extremely wealthy in little time, but those are extreme exceptional cases. Investing is complicated, and trading is even more complicated. Most day traders aren't really making any money, and believe it or not, they do it for fun. They literally gamble their money without really understanding the markets and analyzing patterns that they don't get. Myth 6. Rich people are evil. This is one of the most ridiculous myths ever. This comes in many shapes and forms, but it gives away the same message. To become rich, you must do unethical things. That's very untrue. It really is up to you to do good or bad with your money. Money is just a tool, and if you have a negative connotation with it, your mindset is probably stopping you from making any more of it. Myth 7. Saving isn't worth it with small amounts. This is also wrong. Doesn't matter how small your savings are, you have to develop the habit of saving as early as you can. This is the concept of paying yourself first. You can read about it in the book, The Richest Man in Babylon, by George S. Clason. It says that no matter what happens, you need to save a percentage of your income before paying anyone else, taxes and rent included. No excuses. This percentage might be 10%, 20%, or 1%. Develop the habit of putting money away, and you won't regret it. Myth 8. You should avoid risks at all times. Wrong. In order to grow, there are two things that you must be ready for. Failure and hard work. Assuming you already are ready for the latter, let's talk about failure. You should stop being so afraid of it. Failure isn't game over, it's a lesson. After failures, you can pivot your strategy again, and eventually you'll hit your target. But don't get me wrong, I'm not saying to start taking risks randomly. You might as well burn all your cash, that's not the point here. You should always calculate your risk, and your risk tolerance. With time, your risk tolerance will increase, and so will rewards. Bigger risk equals bigger reward. Myth 9. You need to live below your means to become rich. It depends on what level you're going for. If you're trying to save Starbucks money and buy cheap stuff for the rest of your life just to save some extra cash, you can go ahead and live below your means. But if you're trying to seriously improve your financial situation and achieve financial freedom, you should stop listening to that advice. Am I saying that you should start buying random stuff? No, I'm saying that you should budget your spending, but still buy things that you enjoy and make you happy. There's a concept called practicing success. I want you to do it. To practice success, you start behaving as if you've already achieved what you're trying to achieve. Do you want that car? Go test drive it, smell the interior, feel the road underneath it. Do you want a house? Visit one. Pretend that you're about to buy it. This is the most motivating thing of them all, and it costs nothing to try it. As long as you only purchase things for yourself, not because of peer pressure, you should be fine. Myth 10. You don't have to Wrong. You must analyze your spending. You don't have to count every single dollar. But still, even small expenses accumulate at the end of the month. If you find it difficult to save and you aren't analyzing your finances, you're going to be surprised by how much you actually could save if you stopped wasting money on stuff that doesn't actually make you happy. You can make a spreadsheet and divide your spending categories into investing, saving, needs, wants, and whatever. Now you should watch this, How Debt Can Make Money, and this, 10 Books With Great Financial Advice. Thank you guys so much for watching the video, I hope you enjoyed it. Go ahead and give it a thumbs up and if you're new to the channel, welcome, and consider subscribing for more awesome content like this. With that said, have a great day you guys, and I'll see you all in the next one.