We all grow up hearing the same financial advice: Spend less, save more and invest early. While most of these words of wisdom ring true, some are money myths that could cause you more financial stress than benefit.
Myth #1: Debit is always better than credit
The real deal: Credit cards may actually be the best payment method on occasion. First, many credit cards offer rewards in the form of travel miles, cash back, and other bonuses, such as our Visa Signature Rewards Card and VISA Platinum Rewards Card. Second, building and maintaining a strong credit history is crucial for your financial wellness. The best way to achieve this is by using your credit cards and paying your bills on time. Finally, lots of credit cards offer purchase protection, which makes them the smarter payment method for big-ticket items.
Myth #2: Buy a home at all costs
The real deal: For many people, including those who are not yet ready to put down roots or who anticipate a career change that necessitates moving across state lines, renting a home or apartment might be the better choice. It can also be a financially expedient option if you live in a super-expensive area.
Myth #3: Investing is for rich people
The real deal: Anyone with a small pile of funds can get a foothold in the stock market. A smart investment strategy puts you on the track to financial independence. Credit union members have access to MEMBERS Financial Services, which offers various programs that complement traditional credit union savings plans.
Myth #4: My partner manages our finances, so I don’t need to think about money
The real deal: While it’s fine for one partner to actively manage the family’s money, it’s crucial for both partners to be aware of the state of the family finances. They both should also be capable of managing household expenses and investments if something were to happen to their partner.
Myth #5: Credit cards will get me through any financial crisis
The real deal: Relying on credit cards in a financial emergency, such as a job loss, divorce or illness, is the perfect way to dig into a deep pit of debt. Thanks to interest, you will be paying back a lot more than you spend. It’s best to build an emergency fund with three to six months’ worth of living expenses so you’re completely covered in case the unexpected happens.
Myth #6: I’m young, so I don’t need to think about retirement
The real deal: The younger you are when you start building your retirement fund, the less you will be required to put away each month and the more you will have saved by the time you retire. Gift yourself with a comfortable retirement by maxing out your 401(k) contributions and/or opening an IRA or another retirement fund. Start today and let compound interest work its magic!
Myth #7: I have enough money in my account for my expenses, so I don’t need to budget
The real deal: Budgeting is for everyone, regardless of financial standing. A budget will force you to make responsible money choices and keep you fully aware of the state of your finances at all times.
Now that you can spot the money myths, start looking into your options for building a strong financial foundation for your future.