Are You Falling for These Personal Finance Myths?

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Personal Finance Myths, Do You Fall For These Personal Finance Myths?

Close-up of an unrecognizable woman using a calculator while going through bills and household finances.

Misinformation is circulating in the 2020s. Perhaps the reason for all the myths, untruths and misconceptions lies in the thousands of sources online, some of which are of questionable origin. Virtually anyone with a computer can set up a good-looking website and publish whatever they want, so it’s relatively easy to fall for unsubstantiated facts and theories spread under the guise of news. Because of this, it’s important for people to check sources before relying on anything they find online.

What are the main offenders today? Certainly, the majority of malicious, unverified data consists of suggestions and recommendations related to finance, accounting, budgeting, and investments. There is a common misconception about using credit cards that is popping up more and more on news and business websites. Likewise, hundreds of internet-based opinion writers revel in dismissing the value of earning masters degrees.

Stock market investing and real estate leasing are two other areas where you’ll encounter a lot of flawed logic and downright bad advice. The proponents of the wrong ideas claim that investing in the 2020s is a losing proposition and that renting housing never makes sense. Another pair of wrong policies involves real estate and life insurance. The misconception behind this suggests that real estate investing is only for the rich and that life insurance is not a smart purchase for the young. Here are some of today’s top financial myths, along with the right information about each.

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Credit cards should be avoided

Proper, careful use of plastic can actually improve your credit score. Credit cards are on so many lists of things to avoid that you’d think they were the worst thing ever invented. Instead, simply because they are abused and abused by many people, they have acquired an undeserved negative reputation. Sometimes the path to wealth building actually involves using credit cards. Avoid the disadvantages of plastic by only using one or two in your daily life. Try to cash out all balances each month, or carry a small balance if necessary until you can pay it back to zero. This way you get all the good and none of the bad effects of credit cards.

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Graduate school isn’t worth the hassle

Many working adults finance and earn college degrees each year. Earning a master’s degree in your relevant professional field can be the most effective way to move up the career ladder. A large percentage of college graduates turn to Earnest graduate student loans to help cover some or all of their educational expenses. Note that while graduate school takes less than half the time of college, the cost can be about the same, as tuition and other fees are typically higher than for undergraduate programs.

Investing in stocks is too risky

There are conservative ways to use the stock market. Just because the current stock market is in a bearish mode doesn’t mean there aren’t opportunities for investors. In addition to shorting stocks and other assets that are on a downtrend, it is possible to find some securities that have bottomed in price and may be on the way back up. The fact is, many investors make money in all sorts of market scenarios.

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Renting is a waste of money

Sometimes it makes sense to rent living space. While it usually makes sense to own a home rather than live in an apartment or rental home, there are some circumstances when buying is not the wise option. These include economies like the current one, where prices for new and existing homes are at all-time highs but rents are relatively cheap. In most cases, the difference between renting and owning your own home makes sense. Often this looks like a situation where working adults can simply rent for a year or so while they wait for property prices to drop.

Young adults have little use for life insurance

The best time to buy a cover is when you are young. People in their 20s and 30s can get the best rates for life insurance coverage, primarily because age is the key factor carriers use in pricing certain levels of coverage. Purchasing fixed term or lifetime policies can be a great way for young people to build wealth, protect their financial interests and provide for their loved ones.


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