• Thursday, June 13, 2024
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Four costly money myths debunked

money myths

Let’s take a look at four of the many infamous myths that have been created around money as we know it. They are total hogwash and I am more than happy to debunk them.

Get a job so that you can become rich

Myth: When you have a job, you’ll be able to afford anything you want because you’ll have the resources.

Reality: First of all, you should still get a job- for experience, for sustenance, to thrive. If you’re a salary earner, period? Then that’s it – you’re only a salary earner. But when you increase your capacity to do more with what you earn, that’s when you can become “rich”. I learned early a simplified definition of being rich which means you spend less than you earn and make more than you actively work for. I’d like you to start exploring beginner investment instruments such as Money Markets or AgricTech.

You have to be rich to invest

Myth: It is only people who have so much money that they don’t know what to do with it who start investing.

Reality: Because Money Market Funds have one of the lowest minimum investment amounts with interest compounded daily, you can start small to test the waters and withdraw your money at any time with some interest. Some salary earners actually put all of their income in there as soon as they’re paid and just liquidate weekly for their expenses. All the while accruing daily interest to that account. If you don’t do right by what little you think you have, who’s to say what you’ll do when you think you have plenty?

Bottom line, start small and be consistent.

A savings account is an emergency fund account

Myth: Saving money protects you when you have an emergency.

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Reality: Saving money specifically for emergencies is what protects you when you have an emergency.

Get this – An emergency fund account is a savings account but a savings account is NOT an emergency fund account.

You can save for a new phone; your rent or school fees and you can save for the rainy day. A lot of us make the mistake of saving blindly such that when any emergency comes, we dip our hands in coffers meant to improve our lives and just like that, we’re left with nothing. Here’s what you can do – Historically, which problems/emergencies are most likely to pop up for you and when? Put money away for those.

If it is not expensive, it is not good

Myth: Good things come in expensive packages.

Reality: This doesn’t only apply to wearables but with everything else. You can buy a good car that isn’t a range rover, you can live in a good house that is not in Lekki. Similarly, you can get the best returns on an investment even if it doesn’t give the best interest rates up front- because you understand compounding interest. The crux is to cut your coat to your size, and not bother with what the Joneses think. Avoid acquiring things of depreciating value just to impress people. Comparison is the thief of all joy.

In all, if you’re earning a salary of 30k Nigerian Naira, we don’t expect you to be focusing on buying a car in 6 months or to start sending your dependants on shopping sprees or buying luxury goods with no other source of income in sight. What I expect you do is to be strategic with your salary while you look for ways to improve your marketability to earn more money. Until you break the cycle of misinformation, money myths will continue to lead you down the opposite path to financial security. As we prepare for salary week, my next article will touch on the right way to optimise your salary. See you then.

 

JR Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www.reach.africa. His company builds software to help young people and companies to manage and grow their money.