The Biggest Spending Myths You’ve Been Told

I recently watched a YouTube video where two doctors were debating. It was not about healthcare or if BMI made as much difference as we thought. No, they were arguing about whether almonds were healthy for you. I didn’t know there was a debate on this. I thought that point blank, they were supposed to be a go-to snack, as long as they didn’t have too much salt and artificial flavorings. Everything we’ve learned growing up can be challenged. I mean remember how disappointed you were when you found out Santa wasn’t real from the bully at school?!?

These myths and deceits are out there about your money as well. Today let’s tackle 5 of the biggest lies you’ve been told about spending and what you can change to get yourself on the road to financial independence.

1.??????? You Need a Strict Budget

I can hear Dave Ramsey yelling now. Without a budget you have nothing. You don’t have a plan without a budget. I will tell him I have a great plan and so do many of my clients, and we don’t have a written down, by the rules, budget. The concept of a budget often scares people before they even start and once you get the budget done, it often goes into a dark drawer somewhere to be found two years later with dust on it. Budgets typically don’t get followed.

What you need rather than a budget is an awareness of your spending. What are you spending? What are you spending money on? How often do you spend? So, if you don’t want a hard budget, no problem. Schedule 10 minutes each week to look at your credit card statements and bank accounts. If it helps, input them into a spreadsheet and put a category next to them like “entertainment” or “utilities”. I know someone who also categorizes by “needs” and “wants”.? This can let you think about the purchases you made in the past and will help you curve spending in the future to what you want so you can hit your saving goals.

2.??????? Little purchases Don’t Add Up. Ignore them.

There are some well-known influencers out there who continue to say that your daily latte is not going to stop you from being rich. It’s not a big enough purchase to make a difference. I cannot express to you how much I disagree with this. Yes, in theory, $5 a day is only $1,825 a year. If you invested that money and got a 5% net rate of return, you would have $4,842 in 20 years. It’s nice money but it won’t be enough for retirement. Even if you saved that same $1,825 a year for 20 years with a 5% rate of return, you would have $65,188. Nice but not enough for retirement still.

Well, wait a minute! Why are you making points in favor of what these influencers are saying?

Because it’s not about the data or the calculations…it’s about the mindset. Deciding to trade out your fancy hotel for just a mediocre one for your friend’s upcoming wedding is a much harder decision than skipping coffee a few times a week. But…both feel like a win. Small wins can build the money habit muscle you need to start making saving decisions with bigger parts of your life!

3.??????? Buy Now Pay Later is Awesome!

Ecommercedb.com reported recently that the Buy Now, Pay Later (BNPL) feature was used by 6.5% of orders on Amazon’s Prime Day in 2023. That sounds like not much but that small percentage brought Amazon $927M more in revenue which is a 20% increase from 2022! That’s great for Amazon but that also means a lot of people bought things that they couldn’t afford at the time.

Have you ever thought to yourself when you are looking at a purchase you shouldn’t buy, “I’ll get it now and figure out how to pay for it later.” You know it’s not the right way to do it, but you do it anyway. That was a one-time purchase that maybe you regret or it started some credit card debt that you are not proud of. However, this buy now, pay later feature, or even worse, being on a monthly payment plan is making this one-time decision a regular event. Pretty soon, people have so many monthly payments or payments coming due that they forget about that they will pile up so quickly. Call on the debt. It will put them in the hole 10x faster.

Good rule of thumb: If you have no way of paying for it in full or no strategy for paying it off, don’t buy it.

4.??????? 0% interest Credit Cards

Remember when this was basically what everyone was talking about? It was all over TV and Radio. People happily purchased away because they had no interest due on their credit cards. They obviously didn’t continue to have the shiny sheen on them for long because now no one barely utters the name anymore. Although, at least a few times a year, I have someone ask me, “Should I move my debt to a zero percent interest card?” so it’s worth the discussion.

These cards weren’t as easy to use as once thought. Here are things they don’t tell you about 0% interest cards:

·??????? You’ve got to pay them off by the deadline or the interest is even higher than a typical credit card

·??????? If you miss a payment, you might lose that 0% interest feature and have a higher-than-average interest in the future

·??????? You don’t typically get any kind of rewards or cash back on these cards

·??????? Transferring your balance to a 0% interest rate can cost you a fee of up to 3% of the balance being transferred

However, are you ready for the biggest problem with these cards? People often keep adding to their debt on the card because they aren’t saving to an emergency fund to pay down the debt/card. Things come up and they just add it to the card. This is not a good way to get out of debt for most people.

5.??????? You will spend less in retirement

This is the biggest lie of them all. We have a saying in the financial planning world: In retirement, every day is a Saturday. And you know what? Saturday is the most expensive day of the week. We want to see and do everything we didn’t get to do while we were working. We want to buy our families things to show them we care. Even though many of us are on a fixed income to make sure we don’t run out of money, we want to celebrate the freedom from the hard years of work. Those celebrations can be expensive!

There are three stages of retirement:

·??????? The Go-Go Years

·??????? The Slow-Go Years

·??????? The No-Go Years

With modern medicine, the no-go years are getting shorter and shorter in duration. Those Go-Go Years and Slow-Go Years can be expensive. Make sure you take a realistic look at what you want to do in retirement and factor that on top of your current spending.

*Note: Moving to a lower-cost state is not always the solution.

I’ve seen many people move to a lower-cost state and still spend insane amounts, way over their expected expenses when they were doing their planning.

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There you have it! The 5 biggest spending myths debunked! What can you take away and apply to your daily life now?

By breaking free from the shackles of false spending beliefs, you pave the way for a brighter financial future. Embrace the truth, empower yourself, and watch your savings grow!

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Need some small wins to start saving more for your future, download our free resource: Baby Step Your Way to Financial Independence @ https://www.onevisionretire.com/resources .? There are 15 tips to get you going on your financial freedom journey. Easy to implement and an awesome way to feel better about yourself and start building your money confidence.

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Investment advice offered through Integrated Financial Partners, doing business as One Vision Retirement, a registered investment advisor. The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Integrated Financial Partners does not provide legal/tax advice or services. Please consult a qualified legal/tax advisor regarding your specific situation.

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