February 17, 2011, 6:00 am

Financial Myths College Grads Need to Stop Believing

by: MD    Category: Miscellaneous
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Money Management Myths Within any given day I interact with many different people. Between running into friends at the coffee shop, meeting new fitness enthusiasts at the gym, or just shooting the breeze with co-workers, I end up learning a great deal from others. These days it’s not rare for communication to turn to money matters. I don’t preach or anything, but I do listen attentively. This is why I wanted to share some money management myths that college graduates need to stop believing:

Myth #1: I will worry about saving money when the time comes.

Fact: The time is now.

When the time comes it’s usually too late. This is a common reason that I find most college graduates cite when they talk about how and why they’re not saving any money at the moment. Sure this thinking does have some validity to it. I mean without any financial goals, it may seem like saving money is pointless.

It’s just that we never know what’s going to happen. We never know how soon we’ll get married, have kids, need to buy a new car, want to move out, or just want to buy something cool. This is why it’s critical that we start saving money today instead of putting it off.

Do you want to be prepared or do you want to struggle to put money together when something comes up?

I would rather be financially prepared so that I don’t go into credit card debt when my car breaks down or when an opportunity comes along. You also already have enough expenses to think about with a car (like auto insurance) and you certainly don’t want to be stressing about trying to cover any other issues with your vehicle.

Myth #2: There’s no point to save money when I don’t make a lot of money.

Fact: The sooner you develop good habits the better.

This is like saying that you don’t need to eat well or train at all just because your metabolism works great at the moment. If you build strong money management habits at a young age they will roll over with you as you get older. It doesn’t matter if your next paycheck is $500 or $5,000. What matters is how much of that paycheck you’ll save. If you don’t save money now it doesn’t mean that you’ll save in the future. As you get older and make more money, you’ll generally have more reasons to spend even more money.

I personally got into the habit of saving money back when I was making $8/hour for cutting grass and doing other yard maintenance. I would strive to save half of my tiny savings. It wasn’t much money but I built money management skills before I was old enough to drive.

Myth 3#: Time is always money.

Fact: Time is not always money.

I used to believe in this point for the longest time. Then I realized that this expression is nothing but an excuse for paying for everything. What I mean is that people will pay high premiums and justify it as “time is money.” It’s like when someone always takes a cab instead of the bus because they value their time so highly. Another example is paying for basic yard work. Sure you do save yourself more time, but is your time that valuable? I find that over the years efficiency has become overrated and we are spending too much money just to save a little bit of time.

Myth #4: There’s no time to make money on the side.

Fact: There’s always time for everything.

If you can keep up on every single hokey stat, then you can easily fit in an extra hour to work on increasing your income. I’ve had many friends tell me in the last little while that they would love to earn money on the side but they just don’t have the time to do so. This is usually nothing but a lazy excuse. If parents can fit in time to run a blog or earn more money, why can’t a single 23 year old with minimal responsibilities? If you have a goal to earn more money on the side, the only thing stopping you is you.

Myth #5: Saving money is for cheap people.

Fact: This has nothing to do with being cheap.

In my opinion cheap people are those that never have any fun, save money on everything, and don’t pay for value. Saving money has nothing to do with being cheap. Saving money is about consciously spending your money on things that you enjoy, while putting a side a certain portion of your earnings. I love to go out all of the time. This doesn’t mean that I’m careless with my finances. It means that I take care of my savings first and then spend a certain amount on having fun. The key takeaway here is to remember that just because you save money it doesn’t make you cheap.

Are there any money management myths that you think college graduates need to stop believing?

(photo credit: ken wilcox)

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I’m in my mid twenties (so I may be getting a little long in the tooth, so to speak, lol), but this criteria fits most of my friends. They do not want to save for retirement. They do not want to pay more than they have to on their extensive student loans. They do not want to have any responsibility besides going to work. Now most of them work long hours at mentally or physically draining jobs, so I understand the sentiment. But at the same time, lifestyle creep will suck people with this sort of attitude dry throughout their lives.

by: Future Money-Bags | February 17th, 2011 (10:22 pm)

This is very interesting to see written out. I talk about these things a lot with my friends, family, and co-workers, But I have never thought about putting it all together… Ingenious.

I will be recommending this read to others my age (mid-twenties). There are so many excuses I hear (I work in Financial Industry as well) and its good to have things to respond to when someone states something that will hold them back.

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