It's natural to develop biases towards money throughout different stages in life. Parents, friends, the media, and financial articles and books you read influence how you think and feel about money. Some biases help, others hinder. Fortunately, those biases that hold you back can be rethought, and you can change your habits and behavior as a result.
In that light, let's debunk eight common myths about money — and, if necessary, see if we can reset your compass concerning your finances.
Myth #1: I'm young, so I can wait to start saving for retirement.
If you're young and haven't reached your peak earning years, expenses tend to mount. Payments for your rent or mortgage, car, and insurance add up fast. You may also have young children, who are not inexpensive to raise.
However, the best time to start saving for retirement is when you're young. You then have the advantage of many years of having the earnings on your money compound in front of you.
For example, if you start saving $200 per month at age 21, you'll have $570,000 at age 65 (assuming an annual rate of return of 6.5%). If you wait until you're 25 to start this savings plan, you'll have $435,000. And, if you wait until you're 37? Your account will have $180,000.
If you want to have the lifestyle you want when it's time to retire, start young, and get saving. Contribute to your company's 401(k) or open an IRA if they don't have one. You'll thank yourself someday for starting to save when you were younger.
[ Related read: America's retirement savings crisis, explained ]
Myth #2: I have to buy a home as soon as possible.
It's the American Dream: homeownership. If you're renting, you'll be admonished that you're "throwing away your money." But that's not always true.
You may have just moved to an area, and you're not quite ready to commit to a particular part of town yet. You may not even be sure you're going to stay in that area if you've just started a new job. In a case like this, renting a home or apartment might be the better choice.
And, in some parts of the country, homes are out-of-reach financially for many people. Being a single income family makes it very difficult to buy a home. You may desperately want to own your home, but it's better to wait and not be "house poor" because you weren't ready to buy yet.
Myth #3: Credit cards should be avoided.
It can be worth having credit cards if you pay your balance in full each month to avoid paying interest. Many credit cards come with rewards programs that can add up to a nice amount of money for you if you use your card for everyday purchases over the course of the year. This extra money can be redeemed for cash, travel, electronics, or used to invest.
Using credit responsibly can also bump up your credit score, which will make it easier for you to buy a home or car down the road. Some employers even check credit scores when making hiring decisions.
It's hard to dig out of a mountain of credit card debt, but if used responsibly, credit cards have financial advantages for you.
Myth #4: My spouse's credit score impacts my score.
Marrying someone with a higher or lower credit score than your credit score will not impact your score. Each person maintains their own credit score and credit report.
Their score may not impact your score, but it can affect your ability to be approved for a loan, or it may cause your interest rate on loans to be raised. If you apply in both names for a loan, lenders will often look at both applicants' credit scores to decide whether or not to approve the application.
So, your spouse's score may impact your ability to borrow money, but it won't affect your score.
Myth #5: I need to be rich to invest.
The truth is that anyone can invest. Many banks and investment companies will allow you to start investing with regular deposits of $25 per month.
You may not think it's worth it to start with such a small amount, but it's also about developing a savings and investing habit. Once you get used to putting money aside each month into an investment account, you'll soon get used to it and adjust to it, much like you do a fitness club membership.
And don't forget your 401(k) plan at work. If you're having money put into it, you're investing in the stock market through the mutual fund shares you're purchasing.
Myth #6: I don't need to have a monthly budget.
What this typically means is, "I don't want a monthly budget." The truth is that everyone needs a monthly budget.
Have you ever wondered aloud, "Where does my money go every month?" If so, you're asking that because you don't keep a monthly budget. By budgeting, you know where every dollar you earn is going; and you know if you're spending more than you're making.
Having a budget can feel confining and restrictive, but it's necessary for sound financial health. Kind of like eating your vegetables is good for your physical health; it's not fun, it doesn't taste good, but you'll feel better after doing it.
[ Related read: 26 personal budgeting tips, from A to Z ]
Myth #7: An emergency fund isn't necessary because I already have a savings account.
For most of us, a savings account is a "put and take" account. We put money into it and take it out when we want to take a vacation or buy that new laptop with a faster processor. The money seems to come out as fast as it goes in.
An emergency fund is a whole different animal. It's an account that you don't touch unless it's a true emergency. You need to buy a new refrigerator because the one you have has stopped working. The transmission on the car needs to be replaced immediately. You've become disabled, and you need money to pay your mortgage (unless you have disability insurance).
Start an emergency fund and put money into it until you've accumulated six months' worth of living expenses. Remember, it's in addition to your regular savings account; it doesn't replace it.
Myth #8: Earning more money will solve all of my financial problems.
If only it were that easy.
Have you noticed that as your income has gone up, so have your expenses? It's called "spending creep." It's why lottery winners often go broke. They spend more than they brought in, no matter how much the amount was.
The secret to solving your financial problems lies in budgeting, saving, and investing. If you then bring in more money, you can be confident it will be looked after, not squandered.
The bottom line
It takes effort and discipline to get on track with your money. Unlearning the common money myths debunked here will help you live a more balanced financial life with a lot less stress. It's never too late to get started.
Jack Wolstenholm is the head of content at Breeze.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.