1. If you want to save money, stick to a budget.
That’s what we’ve always heard, and we feel guilty about not taking grandpa’s advice. But researchers from Brigham Young University and Emory University found that budgeting can sometimes backfire. They conducted a study revealing that people who shopped with a spending limit actually forked over 50 percent more on a single item than consumers who weren’t budgeting.
2. The more you earn, the richer you are.
You would think that would be a no-brainer, but it turns out to be totally false.
Stephen Goldbart, co-author of Affluence Intelligence and co-founder of the Money, Meaning & Choices Institute explains that earning more just makes most of us spend more. “As people acquire more money, they almost immediately start purchasing things that they’ve felt they’ve always wanted rather than thinking about what percentages that they should put away and the consequences of changing their spending habits.”
3. When you retire, you shouldn’t touch the principal and just live off the interest.
Um, that would be nice, and it might have worked for your parents, but it’s unlikely to work for you, in part because dividends and interest aren’t what they used to be. With disappearing pensions and Social Security payments that don’t keep up with costs for seniors, not to mention a lackluster job market, many of us will need to get creative to figure out how to retire comfortably even if we’ve been able to accumulate something in a 401(k).
4. Money won’t buy happiness.
Well, actually it can buy at least some happiness for some of us.
Researchers from Princeton University have found that if you are a low- or middle-income earner, your life outlook tends to improve if you earn more income. Boosts in salary and happiness increased at the same rate regardless of economic class: a 20 percent increase in salary increased happiness at the same rate for both low-income and high-income people.
5. Collecting coupons isn’t worth it.
The folks at Mint.com have concluded that if you are savvy about it, collecting coupons is indeed worth it.
This comes with a few caveats. You have to avoid the temptation to buy more than you need. Mint recommends keeping a 3 months’ supply of non-perishable food and condiments on hand so that you’ll buy things when they are on sale or when you have the coupons instead of being forced to buy them just when you need them. They also suggest checking to see if the coupon is saving you more than you would save if you were to buy generic.
6. Buying a home is better than renting.
This really depends on a lot of factors, like how long you plan to stay in the home and the details of your mortgage. But certainly it’s not true across the board that buying is best. TheWall Street Journal reports than in many places — including large metropolitan areas like Phoenix, Austin, and Sacramento — renting is the cheaper alternative.
7. You can save money on gas by not running the air conditioner in your car.
Ever heard this one? Let’s hope you haven’t sweat too much over it, because according to Consumer Reports, it’s pretty much a myth.
Turning on the A/C in the car doesn’t put more load on the engine and it only slightly decreases fuel economy. At higher speeds (over 55mph), putting the windows down can reduce fuel economy by up to 20 percent, depending on how aerodynamic the car is.