There is an overabundance of information to be found online on how to manage your money. Much of it is great, but some of it is absolutely incorrect and nothing more than myth.
Following these financial myths may seem harmless, but it can be damaging to your budget in many cases. Here are ten fallacies you need to avoid following with your finances today.
Table of Contents
You Should Always Buy a House
Owning a home is a major part of the American Dream. However, it’s not for everyone. Buying a house often ties you down to a location more than renting. Given current interest rates, it’s even more expensive to purchase.
The argument to buy often plays out in that you’re not being wise if you rent. Furthermore, many often argue that it’s the only way to build wealth. Both are incorrect. You should do what’s best for you and not follow the masses.
Credit Cards Are Always Your Friend
Believe it or not, credit cards are not your friend. They are typically issued by large institutions looking to charge you high interest rates on your spending habits.
They can be great tools to use, but they’re not free money.
Investing is Only For People With A Lot of Money
You need a lot of money to invest, correct? Wrong. You can start investing with as little as $50, or less, through a variety of investing apps.
You can open an IRA, invest in the stock market, start a high-yield savings account, and more. Time is of the essence when it comes to investing, not large sums of money.
Budgeting is Too Difficult
Many people have their eyes glaze over when the topic of budgeting comes up. You don’t need to have an MBA, or be a financial expert to have a simple budget.
There are dozens of free budget apps that help you keep track of your money. When you find one you like, connect it to your bank account and much of the work is done for you.
Debit it Always Better Than Credit
Many financial experts promote the idea that credit cards are evil. Used foolishly, you can definitely incur debt. However, using debit cards is not the cure all to your financial ills.
When used wisely, choosing credit helps you build your credit score, not to mention availing you of numerous protections. If you like to earn points, rewards cards can be a fantastic way to stretch your budget.
I Don’t Need to Start Saving For Retirement Now
We often think that it’s ok to wait until our 30s, 40s, or later to start saving for retirement. You’re only harming your future self by believing this myth.
In fact, the earlier you begin the less money you have to save. Start with the 401(k) plan at your job, and save enough to at least receive the full match.
I Don’t Need A Will
We all die, and we all have wishes of how we want our affairs cared for upon our demise. Having a will is the best way to ensure your wishes come to fruition.
Not having one means the court will appoint someone you may not want to take care of things. If you have any kind of means, this could potentially tie up the resources for an extended time. Creating a will isn’t difficult.
There are numerous resources online to help you create one for an affordable price.
More Income Means More Wealth
It’s easy to assume that more income means you’re wealthier. Sadly, that’s not always the case. Recent reports reveal that half of Americans earning over $100,000 annually live paycheck to paycheck.
Earning is only half of the equation. Spending is the other part. If you don’t keep your spending in check, even with increased earnings, you won’t build real wealth.
You Should Only Go With Your Local Bank
Going to your local bank is convenient, but you may be missing out on a lot. For example, local banks don’t often offer good interest rates on savings products.
Online-only banks, such as CIT Bank, offer far more competitive rates. They also have the same FDIC protections.
You Need to Be an Expert to Manage Your Money
A lot of people believe they need to be an expert to take care of their finances. That is a lie. You don’t need to be an expert, have an MBA, or have a CFP designation to wisely manage your money.
There are countless free tools online to help you control your money and achieve your goals. With a bit of DIY you can master your finances.
How to Multiply Your Money
Get-rich-schemes are typically scams. However, there are ways to truly grow your wealth. While not flashy, they can help you build real wealth.
35 Proven Ways to Save Money Every Month
Many people believe it’s impossible to save money. Or, they think saving $20 or $50 a month won’t amount to much. Both are incorrect.
There are many simple money-saving tips that can add up to big savings. You just have to start one, then another, to increase your savings.
7 Ways to Make Mailbox Money
Mailbox money is a lot like passive income. You only need a little money to start to receive checks in your mailbox. Pursue these options to grow real wealth.
11 Best Passive Income Apps of 2023
Passive income is a great way to achieve your financial goals. Thankfully, there are apps that help you start and often with minimal resources. Get started today!
7 Steps to Break the Paycheck-to-Paycheck Cycle
Making ends meet is hard on a limited income. However, it is possible to break the cycle and find financial stability. You just need to know where to start.
I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.