“My personal finance problems will just sort themselves out.”
It’s a common mindset trap to assume that a windfall of money or some other stroke of luck will one day resolve your financial issues. It’s just wishful thinking and an unhealthy way to manage your money. It’s a sign you may be too scared to face reality. In fact, a new poll from the National Foundation for Credit Counseling found that 80% of us admit to making the worst decisions when it comes to our finances, since we’re afraid to reality and make tough changes.
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“I’ll just buy now and pay later.”
A separate NFCC poll found that more than half consider overspending to be their biggest financial regret. And you can bet there’s a little voice in their head that says, “I can buy it now and just afford it later.’
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But with the average credit card balance among those with debt surpassing $15k, that’s a dangerous rabbit hole to go down. Making minimum payments at, say, 18% interest, it would take 13 years and $6,800 in interest to pay off that balance.
“I can’t afford to save for retirement.”
Another money lie we often tell ourselves is “I can’t afford to save for retirement yet.” But actually you can’t afford not to.
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Time is money. The compound interest your money will earn over the years will yield a bigger balance when it comes time to retire. For instance, if a 25 year-old saves $5,000 a year, earning a 3% annual return, in 40 years there will be more than $300,000 in the bank. But if this person waits five years to begin saving and invests the same amount of money, she’ll wind up with $75,000 less by age 65.
What are some other money lies you’ve caught yourself believing?