Stupid things people believe about money

by Rachel Wait on 10 May 2010  |  19 comments
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Rachel Robson highlights seven stupid things some of us believe about money...

I have to admit that when I first decided I wanted to be a journalist, I didn’t exactly dream of writing about finance. And when I now tell people about what I do, I quite often get greeted with a blank look and a change of subject.

Yet one thing I have learnt in my time as a personal finance writer is that understanding how to look after your finances is important. And it’s certainly made me far more aware of how I manage my own money.

Unfortunately, however, a lot of people simply aren't interested in finance. And that translates into ignorance. In fact, a lot of people believe a lot of stupid things about money! If you don't believe me, take a look at these shocking statistics.

Neglecting council tax

When it comes to spending money, many of us don’t seem to know how to prioritise. In fact, a recent survey from MyVoucherCodes.co.uk revealed that a third of women think buying beauty products is more important than paying for their council tax, while 36% of men would rather put money aside for takeaways than council tax.

But given you can actually be thrown in jail for not paying your council tax, this is pretty darn stupid if you ask me! When it comes to prioritising what you should pay first, make sure council tax is high up on the list - far above beauty products and takeways.

Forgetting about food

It also appears that many of us believe having a mobile phone is more important than paying for food.

In fact, more than half of women taking part in the MyVoucherCodes survey said they pay their mobile phone bill before they work out how much of their income they have left to spend on food. When asked why this was, a whopping 82% said they would rather be short of food than be cut off by their service provider and not be able to use their mobile.

And the men were even worse, with nearly two-thirds saying they would pay their mobile bill or buy phone credit before working out how much was left for food.

Admittedly, I would struggle to cope without my mobile phone, but I'd also struggle to cope (and live) without food. Although you need to ensure you have enough money to pay your phone bill if you don’t want to be cut off, food is an essential, so make sure you'll have enough cash leftover for your weekly shop.

If you think you might be paying too much for your mobile, there's a good chance you can get a better deal elsewhere. So make sure you check out our Spend less on your mobile goal to see how you can slash those phone bills.

Related how-to guide

Spend less on your mobile

Hate receiving your mobile phone bill every month? Don't put up and shut up - find out how to slash that bill and cut your costs!

See the guide

Ignoring the mortgage

Us girls are well known for our love of shopping. And according to the MyVoucherCodes survey, buying clothes is more important than paying the rent or mortgage - for some of us at least. In fact, 11% of women said they would buy clothes before making sure they had enough money to pay their rent or mortgage.

The men were slightly better, with 6% saying they would buy clothes before paying their rent or mortgage.

However, putting clothing before your mortgage really isn't something I would recommend. After all, if you don’t have enough money to pay your rent or mortgage, you may seriously start to regret that little spending spree.

If you’re renting and you fail to pay up, your landlord could ultimately get a court order to evict you. And if you fail to pay your mortgage, the lender could ask the court to make an order to evict you and sell your home.

So before you head out and splurge on clothes, make sure you’ve got sufficient funds to pay the mortgage!

Ignoring utility bills

Paying gas and electricity bills is also not particularly high on the priority list for some of us. According to the same study by MyVoucherCodes, as much as 7% of women and 14% of men claimed that ‘going out money’ was more important than gas and electricity bills.

Related how-to guide

Lower your household bills

How to cut your insurance, phone, broadband, water and TV bills, and save thousands of pounds a year!

See the guide

If you think you’re paying too much for your utility bills, see if you can get a better deal using our gas and electricity comparison service.

Being unrealistic about house costs

If you’ve bought your own property, you’ll know all about the costs involved. But if you haven’t, you might be surprised at how much you could end up forking out in total – and not just for the property itself.

Recent research from Unbiased.co.uk has revealed that one in ten house-buyers believe house-buying extras will only cost £1,000. But in reality, those costs will be far far higher. To give you an idea, here are some of the costs you will face:

• Survey – these range from £50 to £1,000 depending on the level of detail you wish from your survey.
• Solicitors fee – depending on where you are, the opening quote will range from £600-£1,000 for a basic service.
• Local, environmental and water search – this costs between £250 and £300 depending on the local council.
• Stamp duty – this is paid as a percentage based on the value of your home. First-time buyers don’t have to pay stamp duty on house sales up to £250,000.

Income expectations

When we’re young, it’s so easy to imagine we’ll be earning stacks of money when we get older. Research from NatWest recently revealed that teenagers believe they will be earning £31,000 by the time they are 25, and £51,800 by the time they are 35.

In reality, the average salary for people aged between 22 and 29 is just £20,962, while the average salary for people between the ages of 30 and 39 is £28,933!

And finally....

Not really money related, but it gave me a giggle. Slightly worryingly, new research from TVC Group has revealed that one in seven thirteen year olds believe Leonardo Di Caprio painted the Mona Lisa. Ah the youth of today, hey? Perhaps his role in Titanic has confused them... Bless.

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