Better Financial Health in 15 Minutes (or less!)

The Real Path to Wealth: Debunking Common Financial Myths

• Stacey Hyde

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Dive deep into common financial myths that can keep you from achieving true financial wellness in today’s episode. We challenge the prevailing notion that only the wealthy can invest, illuminating how simple strategies, like consistent contributions to broad-based index funds, pave the way for anyone to accumulate wealth over time. In a world where TikTok stocks captivate many, it’s easy to confuse investing with gambling—a notion we clarify clearly. 

Moreover, we dissect the idea that debt is inevitable. With a simple shift in habit—pretending you have debt and saving that amount—you can build a safety net for necessary purchases while avoiding future obligations. We also discuss how renting can sometimes be more economical than purchasing a home, particularly with fluctuating interest rates and insurance costs, proving that financial freedom comes from informed choices and adaptability.

Join us for this enriching conversation and discover how to take control of your financial future. Listeners will gain practical, actionable insights, and tips on creating a sustainable financial path. Don't forget to share your takeaways and subscribe for more financial wisdom!

Envision Financial Planning. 5100 Poplar Avenue, Suite 2428, Memphis, TN 38137. (901) 422-7526. This communication is strictly intended for individuals residing in the United States. Advisory Services offered through Envision Financial Planning, a Registered Investment Adviser.

Speaker 1:

Hi, I'm Stacey Hyde and I'm back for another episode of Better Financial Health in 15 minutes or less, and today I'd like to talk about some money myths that are probably keeping you broke. And what I'm going to talk about in the first is that thinking that you have to be wealthy to invest. I know the Robinhood app and Fidelity and folks like that have brought individual stock investing kind of to the masses, but what I see happening on those is people getting caught up in some TikTok stock or something they saw on Instagram, and that's really more gambling than it is investing. Real investing is boring than it is investing. Real investing is boring. It's buying a broad-based index fund that tracks a whole market, not one sliver or one stock. It's saying that I want to own basically all US stocks and you just put $50 a month in there and you do that every month and over time, what's going to happen while your friends are all caught up in chasing this stock or that stock, your portfolio? Yeah, there's going to be some days, some years, where it's down, but over time it's just going to continue to grow and you're not going to have the risk that they've had. Yes, they might have something that plays out beautifully. They picked NVIDIA back when it was $10 a share. That's not the norm, because I work with a lot of people and I see the stocks that they bought and I ask them, why'd you buy that? And they're usually telling me so-and-so said something about it or I read something on reddit about it and that almost always they have big losses in there. And that's not what you want to do. You want to just buy a broad-based index fund or fund focused on a large segment of the market and just leave it and buy it consistently, because if you buy it every month, some months you won't buy as many shares because the price is up, but when the price is down you'll buy more shares. So that's a way to really grow over time.

Speaker 1:

The other thing that can happen is thinking that debt is inevitable. It's really not, and if you can just pull back and pretend that you have a car payment, maybe your car's paid off and you're like, well, I'm going to need a new car soon and I guess I'm just going to have to have a $700 a month car note. No, no, no. Start putting pretend you have a car note now. Put that money now. I would argue that money that you know you're going to need within three years should not go in the stock market. It should go in a money market account or a high yield savings account. Just start paying yourself that money and setting it aside. One, you find out whether you can really afford to have that level of debt, but two, it allows it to grow. And so then when you go and actually buy your new car, instead of having a $700 a month car payment because you have this nice down payment, you can probably get it for $500. Or you have, if you still want to do, $700, you can pay it off in three years instead of five or seven years. So that's a way to really kind of break that cycle of debt. And if you do this consistently so even when you've paid it off you still pretend you're paying it it's going to get to the point. You know, maybe two cars from now you can pay cash for a car. I know that that sounds crazy and it's like like wow, didn't really ever think about paying cash for that, but that really helps you. Also, if you know that you want a new mattress, you can start saving for that now.

Speaker 1:

Putting the money aside, you don't have to take on debt. And what happens with debt is you build these, this sort of house of cards, so, so to speak, and then something happens. You have an unexpected medical bill. If you're a homeowner, something goes wrong with your house at the worst possible time and then all of a sudden you're behind and then your credit's taking a ding and then your payments aren't as low as they used to be, and it really does have a negative impact on your overall quality of life because it's stressful, whereas if you just decide that I'm not going to use debt or I'm going to absolutely minimize it, you will have a lot more cash flow coming in. And if you're just disciplined and pay that off to the side so that the money grows, you won't necessarily always have to buy stuff on credit.

Speaker 1:

And then people will come and say well, we'll give you zero interest for six months and you can decide if you want to do that or not.

Speaker 1:

But if the money's already sitting there in that savings account, you don't have to worry that. Um, that you were paying everything, okay, and then on the sixth month you couldn't make that last payment, so all of a sudden you owed all this back interest. You basically have the money sitting there and it's just on auto payment and you're earning the interest on your money while you're using theirs at 0%, so you don't always have to have debt, you can invest. And then the other thing to keep in mind is that and I've said this before is sometimes renting is cheaper than buying, and especially if you're going, if you're not sure how long you're going to be in a place, renting can be a lot less expensive, especially now with the cost of homeowners insurance and with the higher interest rates. So those are some things to kind of keep in mind as you're looking, so that you can really have financial freedom and live your best life free of money worries. Thanks for tuning in. This has been another episode of Better Financial Health in 15 Minutes or Less.