6 Money Management Myths Holding Our Youth Back

Everything you've ever heard about money management is not necessarily true. Or maybe you haven’t heard much at all, because as it stands now, only half of U.S. high schools require a personal finance course to graduate!  Craziness!

Let’s discuss 6 common money management myths undermining your financial future. 

Myth #1: Only wealthy people can get ahead (in today's economy) 

You don’t need to be born into wealth to fulfill your financial dreams. Yes, things are more expensive right now, but the American Dream is still alive and attainable through hard work and perseverance. Your financial stability ALL starts with earning a livable wage. And no, that doesn't just mean doctors, lawyers, and the like. Let me explain.

First, what is a livable wage? It means having enough income to meet your basic needs AND save for emergencies and retirement. The key is to find a career where your interests, abilities, and work values align with what employers need in the market. The industry needs to be expanding and offer opportunities for growth. 

But how do you know what employers need? What industries are growing? What skills you need? Or how do you make yourself competitive for these jobs?  Read on - we can help with that! 

Myth #2: I don't need to budget; I know how much I spend-ish

Do you really, though? Because only 32% of American households maintain a detailed budget, according to a Gallup survey. (No judgement here, it's an epidemic!) Unless you are a supercomputer, it’s too overwhelming to keep track of all your expenses in your head. And no, budgeting doesn't mean occasionally looking at your account statements either. That’s reactive my friend, not proactive. 

A budget is a PROACTIVE and REALISTIC plan that outlines all your spending each month. Think of it like your financial GPS, or like Google Maps. Without it, we’d all be wandering – anyone else completely helpless without your phone’s GPS?! 

Want to control your money, or have your money control you? We can teach you how to budget (easily) my friend, so you can still enjoy that cup of coffee while also planning for your future. 

Budgeting doesn’t have to be the bad B* letter word.  Every penny counts, yes - but, not at the cost of sacrificing things that make you happy and fulfilled. Enjoy your daily dose of coffee while having better control over your larger and more damaging expenses. 

In the words of financial planner Douglas Boneparth, “Going through our entire existence without some level of joy seems like a little bit of a waste. At the same time, there does need to be some discipline and consistency in giving yourself a shot at your financial goals.”

Myth #3: I Don’t Need to Save Right Now, I Have Time 

Think you have plenty of time to start saving? Still living that YOLO life? Here’s the thing… emergencies don't look at your age. And I hate to break it to you, but you’re mortal. No one plans to lose their job, or to have expensive car repairs or medical expenses, but it happens y’all, so you need to EXPECT THE UNEXPECTED. 

You will be surprised to know that according to a Bankrate survey, nearly 1 in 4 US adults have no emergency savings. Y’all are stressing me out! The quickest way to put yourself in financial jeopardy is to have no rainy day emergency fund. 

But what is a rainy day fund? It’s money that's set aside for unexpected expenses that you DIDN’T plan for in your monthly budget. And this fund should cover at least 3 to 6 months worth of expenses. This doesn’t even cover larger, long-term financial purchases like buying a car, house, or starting a business. 

Now I’m probably stressing you out. I can hear you now… “I can’t do this, I can’t even cover my current expenses.” Through planning, discipline, and our uThrive strategies we lay out, YES you can. We can help!

If you’re waiting to have ‘enough’ money to start saving, you’ll never do it. Remember, the best time to save or invest money is when you have some - no matter how little. In the long term, when the magic of compounding happens, it’s your consistency and discipline - more than the amount of savings - that is going to bear fruits. 

Myth #4: Retirement Planning is for Old People

Do you want to be broke in your retirement years? No one thinks or plans for that, but it’s the current trend! According to a CNBC report, 20% of Americans aged 50 and up have no retirement savings. Moreover, 61% are stressed about not having enough money for retirement. 

Currently, Americans say they need at least $1.27 million to afford a COMFORTABLE retirement where they can relax and travel! That’s a lot of money- no wonder they are stressed. Do you want this to be you? If I had to bet, everyone in this boat right now would tell young people the same thing I’m about to tell you. Start now. 

Don’t believe me? Take a look at the graph below. If you save $300 a month starting at age 25, you’ll accumulate over $1 million by 65!  But those who delay saving miss out on that compound exponential growth. The 35 year old would have over $400,000, the 45 year old would have $200,000, and the 55 year old would have $50,000 once they all hit 65. What a difference!

Retirement comes sooner than most people expect, and it’s never too early to get started. It’s easier than you may think, and we can help get you started today. 

Myth #5: All Debt is Bad 

Well, we know some “financial experts” believe this. Dave Ramsey never borrows money for any reason, there’s “nothing he wants that bad.” When you are sitting on $200 million in assets, that makes total sense! But most of us aren’t living in this cushy reality.

The reality is the cost of living is skyrocketing, and we all will most likely end up borrowing at some point in our lives. So is that good or bad? The answer is: it depends! Are you thinking short term or long term?

If you’re living beyond your means to fund a lifestyle you can’t afford and are borrowing at high-interest rates with things like credit cards and aren’t paying them back in full each month, then yes… that’s bad. Leaving balances every month doesn’t help you or your credit score, it hurts it. If you fail to save for emergencies and are forced to borrow in a pinch to survive, that’s also not great. All these events can lead to overwhelming debt and financial instability. 

On the flip side, borrowing for an investment, like a house, education, or a business start-up, can be a GOOD form of borrowing because it can lead to long-term financial returns. These assets may grow in a much larger value than the debt you have to repay. Well-managed debts can help them build a secure financial future by acquiring assets.  

Having said that, at the end of the day, you need to pay off all your debts, regardless if they are good or bad. There’s a right and a wrong way to do this. We can help!

Myth #6: All You Need is Love

Huh? What does love have to do with finances? Everything in the world. Your efforts to earn, save, and invest money will make no difference if you do not protect your money as well. Let me explain. 

I know you’re intrigued by your partner’s physical assets (ha), but do you know the status of their financial assets? And I don’t mean this in a gold-digging sense. What I mean is, are you paying attention to how your partner is managing their money BEFORE you ever consider a relationship or marriage? 

Financial stress is the leading cause of divorce in America, and a financially irresponsible partner can inflict serious damage to your financial and emotional stability. Yes, you need love, but you also need the financial tools and education to protect yourself and your relationship so you can truly thrive together in adulthood. 

Let Us Help!

 All these money myths, and many more, exist because schools and our society fail to equip young adults with the financial education they need. This is why financial academies like uThrive were created to fill this huge void in financial education in the US. 

At uThrive Academy, our mission is to equip young adults to become successful adults with a comprehensive toolkit and roadmap to help them achieve the financial freedom they deserve. These tips are just a snippet of the full comprehensive online financial education course covering career guidance, financial literacy, and practical money skills in just 6 modules. Check out the course below!