We’ve all heard some of the crazy old wives’ tales that seemingly have no bearing in reality. You know, those phrases like, “step on a crack and break your mother’s back”, “if your right hand itches, you’re going to get some money”, “if your ear itches, someone is talking about you”, well – you get the point. We’ve all heard these phrases through the years (and probably even used some of them ourselves).

Well, just like the wives’ tales and myths discussed above, there are wives’ tales and myths about money and spending. Let’s have some fun and talk about some of these popular myths.

Buy an Engagement Ring that Costs the Equivalent of 2- 3 Months’ SalaryDiamond Ring

We’ve all heard this one before. Girls may wholeheartedly agree with this one while their significant others cringe at the thought. 3 months’ salary is a pretty hefty chunk of change. Suppose that the future hubby makes a modest $60,000 annually; applying this “3 month rule” means that he is expected to shell out $10,000 to $15,000 for the perfect ring. Considering that a major purchase such as this would likely launch many fellas out there into debt, it may not be the wisest move.

Just where did this idea come from? Back in the early to mid-1900s, DeBeers Diamond Company launched a genius marketing campaign which coined the slogan, “diamonds are forever”. This now famous phrase portrayed diamond rings as the symbol of “true love” and the most recognizable symbol of marriage. Later, in the 1980s, the company launched another campaign prompting men to essentially put a price tag on the worth of their relationship by asking “is she not worth two months’ salary?” Thus, the idea of an engagement ring costing a percentage of a man’s annual salary was born.

So how many people actually believe this? During a 2017 Rakuten survey, a little less than half of those polled (both men and women) expected between $1,000 and $5,000 to be spent on engagement rings – a far cry from the 2 to 3 months’ salary “rule”. Most people that were polled didn’t feel that the “rule” applied and that it was better to start a marriage off without the added debt of paying for a fancy, larger-than-life ring.

Red Cars Cost More to Insure

Red CarWe’ve all heard this one before, but does it hold any truth?  According to the popular insurance company, Esurance, the answer is a resounding NO. Many things affect the price of your vehicle insurance – your age, driving history, the year of your car, its make and model – but color has absolutely NO bearing on your rate.

Where exactly did this idea come from? Well, part of its origin may come from the idea that red cars are more likely to be pulled over. People have thought that the vibrant color is more noticeable than, say, a black or a white vehicle. So while the vehicle may be more “noticeable” which may cause it to be more likely to be pulled over, this in no way affects the price of the insurance. But, if you rack up lots of traffic tickets for speeding, you can bank on your insurance going up due to your driving history. So, if you’ve always dreamed of driving that bright red convertible but worried about higher insurance, you can rest assured that the only things affecting your insurance is YOUR driving history and vehicle specs – NOT its color.

“My Kids Should be My Top Financial Priority”college

Becoming a parent is a huge responsibility that requires sacrifice – of your time, your finances, well, every area of life. Parents should absolutely do all they can to meet their childrens’ needs and provide them with the best life possible. However, this should NOT come at the expense of their own retirement and future savings. The main thing I am referencing here is paying for college. It is GREAT if you are financially able to help your kids to pay for (or completely pay for) their college. However, it just isn’t feasible for all families.

Should you put your retirement savings on hold or even use your retirement savings in order to pay for college for your kids? The answer is probably not. The best gift you can give to your kids is your own personal financial freedom. If you aren’t financially independent and are relying on your kids to help support you later on, it’s going to put added stress on your kids that could have been avoided.

Am I saying that you shouldn’t help your kids to pay for college? Absolutely not! If you are financially able to and want to help them out, by all means, do so! However, if you are paying for college tuition at the expense of halting your own savings or dipping into your retirement, you may want to reconsider. Be honest with your kids about how much you are able to help them (if it all) and brainstorm together some ways to help them fund their higher education. Both your kids and you will be happy you had this discussion a few years down the road.

Renting is Just “Throwing Money Away” Every Month

Sold HomeWho hasn’t heard this one at least once. While owning a home is a wonderful thing that can definitely double as a smart investment, that isn’t the case for everyone. It really depends on your personal situation.

For example, if you move around frequently or expect to change your lifestyle in a major way in the near future, making a major purchase such as buying a home may not be the best move financially. In order for a home to be a good financial investment, you’re going to have to give it time to appreciate and be worth more than you paid for it. You’re also going to want to have some equity built up. This all takes time. If you are planning on moving in the next couple years, you may want to talk to your financial advisor and weigh the pros and cons of renting versus buying.

Buying a home comes with financial obligations which renting doesn’t entail. For example, you’re going to have property taxes due, repairs and general maintenance (which your landlord took care of when you were renting), and mortgage interest. On the flip side, renting isn’t always as stable as owning your own residence. For example, your landlord may suddenly decide to sell the property in which case you’ll have to find somewhere else to live. Your landlord may also decide to increase your rent at lease renewal time to a rate which you can’t swing financially. Again, both renting and owning come with perks and downfalls. If you are uncertain, sitting down with a financial advisor may be a good idea in order to weigh the benefits and pitfalls in light of your own personal financial situation.

The “myths” we mentioned above are just a few of the old sayings that all of us have heard before in reference to spending money. Some of them are rooted in fact, but others are just plain silly.  Make sure to tune into our blog next week when we discuss some of the “savings” myths that are out there!

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“Do People Still Follow the 3 Months’ Salary Rule for Engagement Rings?” Theknot.com, www.theknot.com/content/spending-three-months-salary-on-engagement-ring.

“Esurance Insurance Company.” Esurance, www.esurance.com/info/car/myth-red-cars-cost-more-to-insure.

Escobar, Sam. “Here’s Where That 2-Months’ Salary Engagement Ring Thing Started.” Good Housekeeping, Good Housekeeping, 21 Mar. 2018, www.goodhousekeeping.com/life/money/a32609/two-months-salary-engagement-rule-origin/.

Nason, Deborah. “What’s More Important: Saving for Your Own Retirement or Your Kids’ College Education?” CNBC, CNBC, 22 Nov. 2016, www.cnbc.com/2016/11/21/should-you-save-for -retirement-or-your-kids-college-costs.html.

“The 6 Biggest Myths about Money.” The Week- All You Need to Know about Everything That Matters, 27 Feb. 2014, theweek.com/articles/450909/6-biggest-myths-about-money.