More Money Myths To Bust

*This is a collaborative post on money myths, but all thoughts and opinions are my own

Back in September, I did a post all about money myths to ignore and there were so many more I could write about so I thought I’d do a follow-up. We’ve all messed up when it comes to money and believed some of these money myths before.

Money myths- A house deposit has to be 10%

When I was first thinking about buying a property I thought a house deposit had to be 10%. And with the average house price in the UK being £271,000, just over £27k is a large amount of money to think about. But your deposit can vary quite a lot from the standard 10%. Some banks do offer 95% mortgages so you’ll only need a 5% deposit for your property. Although this will depend on you being able to get the 95% mortgage.

You can also put in much more of a deposit of than 10%, the more you put down the better position you’ll be in. Not only will you have to borrow less so there’s more chance of lenders approving it. But the less you have to borrow the better rate you may get. We put down 15% deposit and we got a lower interest rate for this than we would have if we’d put down slightly less.

I’ll always be poor

If you believe you’re always going to be poor then you’re probably right. If you don’t change how you think about and deal with money then chances are things won’t change. But you can 100% influence how you think about money and actively seek ways to change it. If you change your attitude then with hard work and motivation you can earn more money through work/ side hustles, you can work on reducing any debt you may have or just improve your position so you don’t feel ‘poor’.

Being poor isn’t just about having a lack of money, it’s about being inefficient with the money you do have. And every time you tell yourself ‘I’ll always be poor’ or ‘I’m bad with money’ the more you’ll be reinforcing it into your brain.

Money myths- More income means more wealth

Just because you earn more money doesn’t mean you’re wealthier. When people start earning more money, generally they’ll up their lifestyle and start spending and buying more things. This is called lifestyle inflation and I’ve spoken about it quite recently. If you start earning more but instantly spend it all you’re no wealthier than when you had your lower wages. And you’ll end up no better off financially. One of the best ways to ensure that you end up wealthier when you earn more is to limit how much your expenses go up and start saving/ investing more, or overpaying any debt, mortgages, etc.

Money myths- Engagement rings have to be worth 3 months wages

This is such an outdated idea, engagement rings, and wedding rings can cost as much (or as little) as you’d like. With the average UK monthly wage being £2304 this would make quite a pricey engagement ring. The three-month rule stems from a marketing campaign by the De Beers diamond company in the 1930s. It sold the idea that true love and commitment can only be shown if a man spent a month’s salary on his wife’s ring. In the 1980s the expectation rose to 2 months, and later 3 months. But there’s no rule, rhyme or reason for this.

When thinking of how much to spend the main factors you need to consider are, how much can you afford and what does the person you’re buying for wants. How much you can afford is the most important as you don’t want to go into debt or spend money you don’t have on an engagement ring. But you also need to factor in the tastes of the person you’re buying for. You may be able to afford to spend £5,000 but they may not feel comfortable wearing something as pricey. They also may want a particular type of ring such as moissanite rings. With engagement rings it’s down to sentiment, thought, and wearability. So ignore the three month wages rule and do what works for you.

My partner is in charge of our finances so I don’t need to worry

If your partner is good with money and is organised enough to keep things in check then that’s great. But if you’re letting your partner take charge and not putting in any management then you’re leaving yourself in a vulnerable position. No one wants to think about splitting up from a partner, or your partner being in a position where they can no lower manage your money. But imagine the position you’d be in if that happened and you had no idea of where your money was, how it was managed etc. You’ve got to look out for both of you when it comes to money and both take an active part in managing it.

Money myths- I don’t need insurance

There are some kinds of insurance policies that you have to have, for example, vehicle insurance, or house insurance if you have a mortgage. But other types of insurance are optional but it’s so important to cover your bases. No one loves spending money on insurance, and we would all hope to have it and never need it. But it has a great purpose to pay out for something in the future if needed.

If your house burns down could you afford to replace all of your belongings? If your pet needed an operation could you afford to pay for it? Or morbidly if you passed away and you live with a partner could they afford to continue living where you live without your wage contributions?

Most insurance policies are a personal preference, but it’s worth considering and thinking ahead.

What money myths have you heard before?

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