Debunking - Money Myths

Common
Misconceptions About
Money:
Forget what you’ve been told by your parents. Talking about money is not taboo.
Quite the opposite, in fact. Talking about money and updating your understanding of
common financial practices is “incredibly important,”
Take the accountability to really try to educate yourself. The more access to financial
education and advice people have, they will have a higher likelihood of doing well and
feeling confident when it comes to their finances.
Myth #1: I’m young, so I don’t need to save for
retirement now
Retirement can feel very far away when you're young—but having all of those years
to save can actually be incredibly powerful. That's because time and compounding
are important factors in a retirement savings plan.
Compounding happens as you earn interest or dividends on your investments and

reinvest those earnings. Because the value of your investments is then slightly higher,
it can earn even more interest, which is then packed back into the investments,
allowing it to grow even more.
Myth #2: You can do it all on your own

While it’s not impossible to look after your finances by yourself, it’s like anything
new, ‘you don’t know, what you don’t know’, and can lead to some very expensive
mistakes. Seeking advice from financial experts can provide valuable insights and
strategies that you might not have considered. And like any good coach, they are
also able to keep you accountable and on the right path to achieving your goals.
Myth #3: Credit cards should be avoided.

In reality: As long as you pay off your card balance in full each month to avoid
interest, making purchases with credit can be worthwhile. Many credit cards offer a
rewards program. If you make all your everyday purchases with your card, you could
quickly rack up points you can redeem for cash, travel, electronics, or to invest.
Also, demonstrating that you use credit responsibly can help you increase your credit
score, making it easier to buy a car or a home later on. It may even earn you a
lower interest rate when you borrow in the future. It can be difficult to dig out of
credit card debt, but if you control your spending and pay the card off every month,
it could pay you back.
Myth #4: You don’t need emergency funds

If you’re earning a steady monthly salary or income and already have a healthy savings
portfolio from FDs to MFs to retirement savings, you might think that you’re all set,
especially if you’ve invested in insurance as well. Many individuals in this situation subscribe
to the myth that you don’t need access to emergency savings.
This couldn’t be further from the truth. Emergency situations by definition demand that
you have resources on hand to address them. It’s critical that you’re in a liquid cash flow
position across the month, and that you have immediate access to liquid assets.
Myth #5: You Can’t Save Money and Pay off Debt at
the Same Time
It’s not uncommon for personal finance gurus to recommend putting all of your
disposable income toward paying off your debt. While doubling down on debt,
especially if it’s attached to a high interest rate credit card, is smart, you shouldn’t
necessarily neglect saving entirely. Consider how you would pay for an emergency
without any money in your savings - you might be tempted to pull out your credit
cards and end up with even more debt.
Myth #6: You Need a Lot of Money to Invest
I will start investing when I have ____________ amount.
Reality:
So, how much have you filled in the blank?
INR 100
INR 1,000
INR 10,000
INR 10,00,000
And the list goes on but, you never invest. Many people have misconceptions that
investment requires a large sum of money. Part of this is that investments are not
usually an area we understand well. It’s easier to say that we shall put in the effort
to understand, and make a good job of it, when we have a “large” sum of money.
Hence this procrastination, which usually ends up in rash decisions being made later
on.
There is no real “minimum amount” where it suddenly makes sense to start

investing. It’s better to think of personal financial management as part of your life
outlook – to ensure you regularly invest a part of your income towards long term
dreams and a part of your overall financial discipline. And with digitization, even if
you’re just getting started, there are plenty of options to choose from.
Myth #7: You must monitor the stock market daily
There is virtually no valuable information in the day-to-day movement of the
market. In fact, advisors often warn that focusing on daily market swings can
contribute to making moves you’ll later regret, like selling at an inopportune time.
Myth #8: You don't need a will or estate plan unless

you are rich or have children.
Creating a will isn’t something reserved for the elderly, it’s a critical step for all
adults. Regardless of your age, once you start acquiring assets or have debts, a will
ensures that your assets are distributed according to your wishes and doesn’t leave a
headache for a loved one. Once done you can forget about it until another major life
event such as when you have children.
Conclusion: Always remember that personal finance is personal. If someone gives you
financial advice, make sure you do your research before taking action.
Happy Planning!
Regards,
CA Rishav Jain.
Phone: 8019057710
Mail: [email protected]

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Common

Compounding happens as you earn interest or dividends on your investments and

Myth #2: You can do it all on your own

Myth #3: Credit cards should be avoided.

Myth #4: You don’t need emergency funds

So, how much have you filled in the blank?

There is no real “minimum amount” where it suddenly makes sense to start

Myth #8: You don't need a will or estate plan unless

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