Money is a complicated subject, and everyone seems to have an opinion. But then, what should you believe and what belongs to the trash? Answering the question can be tough.
One thing is sure. These four myths about money are pure nonsense. Believing any of these will land you in a lot of financial trouble.
You’re too young to save.
There are many myths in this category. Others include “I’m too old to save,” “I don’t earn enough,” or “The interest rate isn’t worth it.” Age impacts your savings, but it’s not so significant that it should make you stop saving altogether.
Thanks to compound interest, the sooner you start saving, the more you can earn. However, if you start saving later than you’d like, you can still earn an interest rate. It may not be as high as you want it to be, but interest is interest.
Saving is a crucial part of financial security. Even if you earn pennies, putting something away can help you cultivate discipline and build a rainy day fund.
The minimum payments are enough to get by.
Credit card debt can be a great tool when used right. It can help raise your credit score and pave the way for bigger benefits, bonuses, and credit allowances. However, it can also get you in a lot of unwanted debt when mismanaged.
Paying the minimum required monthly payment is an example of how not to manage credit card debt. By making these payments, your credit provider can charge you higher interest rates, making sure that you owe more and more.
Additionally, making the minimum required amount also shows that you’re a bad borrower. It shows you’re not financially stable enough to handle credit, and that’s a red flag on your credit score. It’s also the exact opposite of what you want.
You’d be better off financially if you earned more money.
You may not want to believe this, but more money doesn’t necessarily equal more financial stability. In fact, People Management did a survey in 2018 and found that the lowest and highest paid earners are in most financial distress.
Many factors can explain this phenomenon. For one thing, the more you earn, the bigger your obligations, commitments, and pressure from family and friends. High-income earners also want to look the part, which means a bigger house, luxury vehicle, and more expensive vacations. All of these add up to a large bill, sometimes more than any income than support.
Then, there’s the issue of income tax that rises the more you earn. Thankfully, you can use Taxfyle’s income tax calculator (https://taxfyle.com/income-tax-return-calculator) to get a handle on your taxes. Still, more money doesn’t immediately equal better financial stability.
Your home is your biggest asset.
Everyone says this, from your mortgage banker to your real estate agent. But then, how true is it? They usually refer to the fact that homes and real estate typically appreciate, and it’s an investment you can always fall back on.
However, what they don’t tell you is the monthly mortgage payments you have to meet and the severe consequences if you don’t. Unless you have a steady job with a guarantee of making these payments, you might want to reconsider renting a place.
Your mortgage payments won’t stop if you try to switch jobs or have to travel or work. While owning a home is certainly a milestone, it’s worth serious thought and consideration.