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5 BS facts about saving money that everyone thinks are true

Newlywed, new mom and first-time home buyer, Sarah is currently playing out her exciting life in Phoenix, Arizona. She recently gave up her job in finance to stay at home with her baby girl, who between bath time and feeding time, keeps ...

Money-saving tips that are absolutely not true

Do you not make enough money to save any? Are savings accounts the best places to store money? Is a home a good investment? Let’s learn a thing or two about money and debunk some common financial myths.

A recent Gallup poll found that most Americans would rather save money than spend it (62 percent vs. 34 percent), but they’re not actually doing it. In fact, savings rates have dropped to an all-time low in nearly 10 years. Is this due to the state of the economy? Or perhaps it’s because we live in a consumer-driven society where we must "spend, spend, spend" in order to keep up with the Joneses. Whatever the case may be, most Americans simply are not saving money. And if they are, they may not understand the best ways to do so. Here, we’re uncovering five facts about saving money that are total BS.

BS Fact #1: My home is a good investment

While many believe owning a piece of real estate is a good investment, this is unfortunately not the case. Many Americans wrongly believe that the value of their homes will increase over time above the rate of inflation. Homes may get too old to maintain, they may go out of style and there will always be something new and improved. Sev Meneshian, CFP, and president of Public Retirement Planners, states that a "house is a consumer item unless it produces adequate income to cover the expenses or you bought it to flip." A home is a place to live and store your stuff, not a means of making money.

BS Fact #2: It’s a good idea to pay off your mortgage early

Seems to make sense, right? While being debt-free is the way to go, that’s not always the case when it comes to a home mortgage. Interest rates are low, and it may be more worthwhile to invest your money in something other than your mortgage. "Paying back debt over a long period of time (10+) with an income produced by another asset (for example, rental real estate) is good because the income-producing asset can appreciate, and you can pay back debt with depreciating dollars," Sev adds.

BS Fact #3: Cold hard cash is the way to go

Some people falsely believe that their money is only safe if it’s in the form of cash. Ashley Feinstein, CPC, of Knowing Your Worth, explains that "many banks and brokerage companies are FDIC insured, which means your money and investments are insured up to $250,000." Ashley believes "having a lot of cash in your home can be risky. If you are robbed or there is a fire, there is no way to get that money back." We couldn’t agree more — store your money at a trusted, FDIC-insured bank instead of under your mattress.

BS Fact #4: Keep all your savings in a savings account

While you don’t want cold hard cash lying around, a savings account is only good for money you may need short-term (think emergency fund). Depending on your income and short-term financial needs, you’ll want to keep three to six months’ income in a savings account. This allows you penalty-free access to your money if and when you need it.

CEO and finance expert Elle Kaplan of LexION Capital Management, the only 100 percent woman-owned asset management firm in the U.S., recommends investing in a diversified global portfolio. "That money can grow steadily over time," she states. "Once you have an emergency fund of living expenses set aside, it’s time to invest. If you have at least a three- to five-year time horizon, then your money should be invested so that it can be working just as hard for you as you did to earn it," Elle advises.

BS Fact #5: I can’t afford to save money

We’ve all been there at some point in time. "If only I made more money, then I’d be able to save," we think. Turns out, this is the biggest lie about saving money that many Americans believe. There’s always — always — a way to save. Ditch cable and subscribe to Netflix and put the difference in savings, have $25 per paycheck automatically go into your savings account, start using coupons and save the money you saved on food. Other creative ideas include using cash and keeping the change, getting a part-time job on the side or even selling a few of your unused items on Craigslist.

Which money myths do you believe to be true? Share in the comments below.

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