There is a wide array of financial advice you hear everywhere. From TV programs to word of mouth, some information provided may sound convincing and suitable for your situation. That is why it’s difficult to determine what fact is and fiction, what works and what doesn’t. Here are some common money myths that you should be well aware of to avoid financial downfalls.
Misconception #1 “My earnings aren’t enough to save money.”
People who aren’t concerned so much about their finances have a faulty reasoning sometimes when it comes to saving and spending. Although you receive a small income, it is still important to save a portion of it. It is better to have a little something left in your pocket than nothing at all. The key to succeed in saving is to think that in doing so, you are paying or rewarding yourself.
Misconception #2 “Buying a house and lot is a better option than renting.”
Buying a home is long been considered as a good and essential investment to most people. However, acquiring such a major investment is not suitable for all lifestyle and financial capacity. Renting has its good sides too. Renting is a better option if you are just starting your career, or if you have plans to move from places to places. Also, buying a real estate property is challenging as you should also know how to manage a household on your own.
Misconception #3 “I have a stable job.”
The only constant thing in this world is change – and that includes your job. You might think that being tenured at work can guarantee your financial security. But you have to be realistic in life and have a mindset that bad things can happen too. Your company might shut down one day, or you might get demoted, or you might get fired (Knock on wood!). You should be prepared for a job loss by securing three to six months’ worth of expenses.
Misconception #4 “Age 40 is the best time to save for retirement.”
It’s never too early to start safeguarding your retirement. Truth of the matter is the earlier you save for retirement, the better your money can work for you. This is because the interest rate peaks as years pass by. Also, you can have privilege to retire early if you decide to.
Misconception #5 “Emergency funds aren’t necessary because I have a credit card.”
It’s good to stay positive at all times and be optimistic about life. But casualties occur and there are many goings-on that are out of your hands. That is why emergency fund is important. But this should not be confused with owning a credit card. Swiping the card incurs you a debt, which can accumulate in time and you might find it difficult to recover.
Misconception #6 “Putting your money in precious metal like gold is a good investment.”
When there’s an economic downturn, some will advise you to buy gold and other precious metals. Advertisements also lures you to think that it is an indispensable investment. Contrary to popular belief, gold and other precious metals are actually risky to buy as an investment. It can be subjected to extreme price fluctuation, which isn’t good because your money is being put to gamble.
The key to financial success is to be discerning in handling your finances. If in doubt, consult professionals to ensure you don’t fall for money traps.