5 Common Myths About Your Personal Finances

June 28, 2022

How much do you know about money? Most people do not know as much as they think they do. Parents and schools often do not teach much about personal finances, and as people grow up, they get by on received wisdom or vague pieces of advice they’ve gleaned from others. Unfortunately, this means that a lot of people are operating on guidelines that aren’t necessarily true, including the myths below.

Always Avoid Debt

Like most financial myths, this one has its origins in truth, which is that carrying a large burden of debt throughout your life is not a good idea. However, there are certain types of debt that it’s not bad to take on. A mortgage is the first. For most people, this is the only way to buy a home, and it comes with certain tax benefits. However, another type of “good” debt is student loans. More education generally means a higher-paying job, so although you have to pay for your education, you’ll make more money over a lifetime. Having said that, it’s still a good idea to try to pay this debt off sooner rather than later. One way to potentially do this is by refinancing your student loans. This can lower your interest rate and also reduce your monthly expenses by submitting a fast application online.

Invest Conservatively as You Age

Conventional wisdom says to make risky investments when you are young, and you can recover from the volatility of the stock market or from any losses. However, if you’ve got the appetite for it and your money for retirement is secure, there’s no reason you can’t continue taking some investment risks as you get older. You might lose, but some of those risks could also pay off handsomely.

Retirement Is Doomed if You Don’t Invest Early

There are financial tips to protect businesses you probably learn about, but what about financial tips to protect your own personal future? It’s true that the sooner you start investing in a retirement account the better, but for some young people, the money just isn’t there. Others don’t realize how important it is. So, what happens if you hit 50 and you’ve got very little saved? Are you doomed to work forever? You can still save aggressively–in fact, you can put more away in certain accounts once you hit 50. There may be many other creative ways to generate income as you age as well. Read up on some strategies for funding retirement to find out more.

Always Buy Instead of Rent

A home can be a great investment that ensures you always have a roof over your head, but not everyone wants the responsibility of being a homeowner. The cost of upkeep and repairs can be staggering. Your money might go further in other investments. Buying simply may not suit your lifestyle. Unless you’re sure that you really want to own a house, be sure to look at all the data and all your options before you take the plunge.

Avoid Using Credit Cards

This one should perhaps be amended to avoid using credit cards carelessly. As long as you pay off your balance each month, credit cards can be a great way to accumulate perks like cash back and air miles. However, do make sure you have emergency savings set aside so you don’t hit a month where you can’t pay off the balance and get charged interest.

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