Don’t Buy These Three Money Myths


And He said: “Take heed that you not be deceived. For many will come in My name, saying ‘I am He.’ And, ‘The time has drawn near.’ Therefore do not go after them. – Luke 21:8

With all the avenues of communication open to the world, media, TV, internet, it’s amazing that so many are deceived. Apparently deceivers are better at communicating than truth tellers. Myths are a tool used by deceivers throughout history, and some of those myths have been around for a very long time.

Here are three old sayings about money I consider myths. You can judge for 1 (7)

1. Pay Yourself First

No, we can’t pay ourselves first. We have to pay our obligations first. You know—those expenses, loans, mortgages. Not paying our obligations is the same as stealing. If we’ve taken items or services from someone else, the money to pay for those obligations belongs to them at the time agreed upon, not after we’ve paid ourselves. Even God Who expects our first fruits wouldn’t expect us to steal.

We should pay ourselves, though. It’s called saving. But that’s why a budget is important. So we’ll live within our means in order to have enough to pay ourselves.

2. You Get What You Pay For

No, not always. This myth refers to the belief that the more money you pay, the better quality you’ll get. Actually, the more affluent we are, the more likely we’ll overpay. When you buy a particular brand, you may be paying for prestige instead of real quality. How do you tell what something is worth? Nothing is better than experience to teach us which item or service is of better quality for the money. Recommendations and reviews come next.

Buying shoddy items is a waste of money, of course, but overpaying for a brand name is equally wasteful. Accountability requires that we pay only what goods and services are worth.

3. A Penny Saved is a Penny Earnedphoto 4 (1)

How wonderful if this were true. Unfortunately, it rarely ever is. Your penny saved today is not going to be worth what you could earn at a future date. In other words, inflation will eat away at your savings. Inflation is a given in a capitalistic economy, so your savings must take this into consideration. Also, there are no true hedges against inflation. The only way to guarantee value will remain the same is to save the actual goods and services. Since there’s no way to save services, and goods will deteriorate over time, that isn’t a viable option.

Not all old sayings are myths, however. Save for a rainy day is absolutely true. No matter the circumstances, as long as this world exists, there will be rainy days. It isn’t a question of if emergencies will occur, but when. Our budget must contain savings for emergencies.

In spite of what economists say about the economy improving, fewer people are saving at all. It’s easy to understand why. Full time jobs are as hard as ever to obtain. Household income is falling. Those who were wise in days of plenty, now have their savings to fall back on.

We live in a world of deception, but the wise are never deceived. No matter how many say something is true, no matter how long they’ve said it, test it for yourself. Then make sure you don’t deceive yourself.

Getting on the Right Road

Enter by the narrow gate; for wide is the gate and broad is the way that leads to destruction, and there are many who go in by it. Matthew 7:13

All roads are not equal, but there’s a right way and a wrong way with every decision we make. Added to that, the stakes are really high when you’re deciding what you’re going to do with your life.

I’m speaking to the graduates today, and I’m sure everyone is pumped after hearing those lofty commencement speeches. Now that the celebrations are over, this is where the rubber meets the road. It would be wonderful if every decision was as clear as the girl pictured here. It’s not, but here is an exercise that will help you get your financial road in focus and answer the question are you ready to live on your own. This will help you come up with Plan A. images

If you’re a graduate, you’re too young to remember the old Cosby Show when Theo said he didn’t need to get good grades because he could just get an ordinary job. Bill challenged him to live like he’d have to if he had an ordinary job. Things were exaggerated for comic effect, but the message was clear. Things are not as simple in the real world as young people think. Here is the exercise without the comedy.

Find a Job

The first step in this exercise is to see what’s available in your area (commuting distance) that you’re qualified for. An internet search is adequate for this effort, but if you know of a big business, search it specifically to see what’s offered. Take note of the qualifications required and the salary or wage. For the sake of this exercise we’ll assume you get the job, provided you’re qualified. This is a big assumption that probably won’t happen in real life. Do a little math and find out how much this job will pay you each month and deduct thirty percent. Why? Because that will be needed to account for deductions for taxes, insurance, retirement, and other fees you have no control over.

Find a Place to Live

Now that you know how much you’ll make, look for a place to live. This should cost no more than twenty-five percent of your after deduction pay (net income). Your residence doesn’t have to be a palace, but it should be safe, clean, and within commuting distance of your job. While you’re at it, take a deduction for a car or other transportation. Don’t forget gas and upkeep.

Prepare a Budget

Your budget should include all those living expenses we’ve discussed over the past months. If you don’t remember, go back through my blog posts. Is there enough money left to cover these expenses?

Assess Your Situation

Look at how much money is left at the end of the month. There should be enough for savings and investments. You have your future to think of. Do you have the type of residence you’d like? Vehicle? Is there any slack? You always need slack.

If you don’t like what you see, you’ll have to consider Plan B, and that may require getting more education, training, moving. Options are out there, but look ahead to where those options will take you.

Theo, from the Cosby Show, was only in Middle School when he had to do this exercise, and truthfully, that’s not too soon. I’ve already gotten my grandchildren to play this game. Now they understand how the real world works, they understand the importance of good grades and further education.

images (3)Keep in mind you may have to go on to Plan C because things don’t always work out the way you plan. There are more forks in the road than you might imagine. If you’re just starting out, you have an advantage. You don’t have mistakes to undo. That’s not true for most of us.

Most of us have to back up before we get on the right road, and one of the reasons we make bad decisions is because of attitude. That’s the topic for next week and it applies to us all.


The Graduate’s Dilemma

Let no one despise your youth, but be an example to the believers in word, in conduct, in love, in spirit, in faith, in purity. – 1 Timothy 4:12


Graduation time is here. Proud parents. Excited young people glad to have the tests behind them—but the test has just begun. The real world is waiting.graduation_cap_and_diploma

Oddly, the thought of graduation reminds me of an episode of that magnificent nature series, Planet Earth. They had filmed a snow leopard in the wild for the first time. The female leopard spent several days stalking prey and finally bagged a mountain goat which she had to drag up the steep snow-covered cliffs to her lair. She couldn’t eat the goat on site because she had to share the meal with her young. The offspring proved to be a young male as big as she was. I’m thinking…why didn’t that big oaf go get his own meal? But he couldn’t. He didn’t have the skills to hunt his prey.399px-Uncia_uncia leopard

That’s the way it is with humans. The six-foot-two graduate still has to depend on his five-foot-two mama. In fact, most high school graduates receiving their diplomas this June aren’t ready for the real world. A great number of the college graduates aren’t. In today’s world, some aren’t even ready to leave the nest when they’re thirty. Why? They haven’t been taught how the economy works. Their parents realize this too late and become enablers.

But there will come a time when Mama Leopard will run Junior off…and enabling parents will also. The high school graduate hasn’t reached that point. Given the economic climate of today, very few of them are ready to live on their own, but it’s time they started gaining the skills to become independent and adjust expectations. Most young people want to be independent. They also want to live in the lifestyle to which they’ve become accustomed. That’s not realistic.

So the high school graduate’s dilemma is to decide whether they will learn a work skill or go to college. All things considered, going straight to work isn’t realistic. Some do and are successful, but they are the exception. But if this is for you, get in line of people

Be Prepared

Whether work or college, getting prepared begins way back in the lower grades, and I don’t mean academics. Just like that leopard mother was teaching her young from birth to live in the real world, we human parents ought to be teaching our children. Share your life experiences with the tikes. If you have to search for a job, tell the kids how it’s going, what works, what doesn’t. You might mention it doesn’t help to show up for a job interview with tattoos and slouching pants. If they’re old enough, let them read your job resume. Practice the interview with them.

Never thought of that, did you? I didn’t either. We expect the schools to do it all…but we expect too much.

Have you saved enough for college? Most have not. College costs are soaring. Who would have guessed? All isn’t lost, however.

Which College?

Cost will determine where the high school graduate goes to college more than academics or desire. Keep that in mind. Small state colleges and universities can provide just as good an education as the ivy league ones. And the student won’t have to listen to as much liberal propaganda. True, the small colleges won’t provide the same credentials, but after a few years in the workplace, it won’t matter, since work performance will become your credentials.Wellesley_College_Tower_Court


The high cost of higher education today is an unintended consequence of government programs to help more students go to college—guaranteed student loan programs.

Anyone with a miniscule of knowledge of economics knows higher demand increases cost. The worst of these programs are deferred student loans. Because of this, large numbers of people are graduating so far in debt, it’ll take a lifetime to get out.

Tip for Parents

I recommend that parents save for their children’s education, but if that’s been impossible, do not…I repeat…do not co-sign student loans. Yes, help the kids as much as your current budget will allow. Let them have free room and board while they attend a community college, or buy the text books, or help with the tuition, but never co-sign a loan.

Tip for Students

Suppose your parents couldn’t save enough for your dream college. Direct your sights to another dream. It might even be a better one. Resist with all your might the temptation to take out a student loan.

Apply for scholarships. If you have good grades, there are academic scholarships. If you belong to a minority, there are scholarships for that. If your parents are an alumni, you might qualify for scholarships that way. Google scholarships all over the country and apply to all.

Get a part-time job. Yes, working your way through college is old-fashioned, but it still works. You might even do what I did the last two years of college—night school. The diploma is just as good.

If you have your heart set on a high-priced university, go to a community college the first two years and transfer to the university the last two. The diploma will be just as prestigious and you will have saved a lot.

There are ways to get a college education without going into debt if you’re creative and willing to work hard. The experience will prepare you for the real world far better than that lazy rich kid who goes to college to party and scrape by.

But is it really necessary to go to college at all? I’ll explore that question next week.

Also, when I come across information that I can recommend for budgeting advice, I’ll share it here. These are three.

Dave Ramsey just came out with a new book geared to kids. Smart Money, Smart Kids. Ramsey’s common sense money management approach is highly recommended.

The Suze Orman Show comes on CNBC, Saturday night at nine. The show is entertaining and chock-full of budgeting advice.

Here’s another blog on budgeting advice you might find helpful: budgetbrainiac

Now go get measured for your cap and gown.

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