“Yung ₱500 ko, naging ₱40,000 na. Ask me how.” We all have that one Facebook friend who post stuff like this. That guy probably invited you for coffee so that he can discuss a business opportunity that involves recruiting more people to join a pyramid scheme to sell glutathione products. Needless to say, the money myths he is peddling are pretty easy to dispel.
However, Filipinos have many more money myths, most of which may be less obvious. And these beliefs that people hold could result in poor financial decisions down the line. Here at GoBear, we identify some of these erroneous thoughts:
Money Myths: I need a lot of funds to be able to invest
A lot of Filipinos tend to associate the word “investment” with huge amounts of money, leading them to think that investing is an activity exclusive for tycoons. However, money myths like this are wrong, not only because they encourage self-limiting, but also because there are many investment avenues that may even cost less than your smartphone. You can invest in stocks for as low as ₱5,000, and in mutual funds starting at ₱10,000.
Money Myths: Investing is risky, so I better save my money in a time deposit account
Sure, the prospect of losing money is scary. However, letting fear dictate our money decisions is even scarier. Why? The truth about money is that savings accounts actually shrink the amount of money you have. The 1% yearly interest rate that a savings account carries loses out to the usual 3% inflation rate; your savings grow slower than the cost of things.
While it’s a good habit to save money, you’d have to go beyond saving if you want to grow your funds. Money myths that encourage fear of risk can prevent you from exploring ways to actually grow what you have. It’s wiser to explore investment plans that let you beat the inflation rate.
Money Myths: Insurance is just a waste of money, my emergency fund is enough
It’s natural to view insurance products a bit negatively, because they add to your monthly bills. Besides, you’re doing well, you feel healthy, and you have an emergency fund that will definitely cover you in case something goes wrong (yet another one of those myths about money), so how will you benefit from insurance, right?
Sure, it’s recommended to set aside an emergency fund that is worth at least three times your current monthly salary. But emergencies come in all shapes and sizes, and a big one will render your emergency fund puny. In this case, insurance becomes a great thing to have, and a terrible thing to forgo because of your money myths.
Here at GoBear Philippines, we aim to help people in becoming more knowledgeable in financial matters and knowing better than believing in money myths. Explore the site for more money tips, as well as all the information you need on financial products such as credit cards, insurance plans and personal loans.