Are You Falling For These Personal Finance Myths?
Close up of an unrecognizable woman using a calculator while checking bills and household finances.
There is misinformation floating around in the 2020s. Perhaps the reason for all the myths, falsehoods, and misconceptions is the thousands of sources online, some of which are of questionable origin. Just about anyone with a computer can set up a beautiful website and post whatever they want, so it’s relatively easy to fall for unsubstantiated facts and theories that travel under the guise of news. That’s why it’s essential that people check sources before trusting anything they find online.
What are the top offenders these days? Certainly, most of the bad and unverified data consists of tips and recommendations related to finance, accounting, budgeting, and investing. There is a pervasive credit card fallacy that continues to appear on news and business websites with increasing frequency. Similarly, hundreds of internet-based opinion writers enjoy dismissing the value of earning master’s degrees.
Stock market investing and property rentals are two other areas where you will run into a lot of bad logic and downright bad advice. Purveyors of misconceptions claim that investing in the 2020s is a losing proposition and that it never makes sense to rent living space. Another couple of incorrect directives are related to real estate and life insurance. The misconceptions behind them suggest that real estate investing is only for the wealthy and that life insurance is not a smart buy for the young. Here are some of today’s top financial myths, along with the right information about each.
Credit cards should be avoided
Proper and 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’re the worst thing ever invented. Instead, because they are abused and misused by so many people, they just get an undeserved negative reputation. Sometimes the path to wealth accumulation in fact it includes the use of credit card. Avoid the disadvantages of plastic by only using one or two in your daily life. Try to pay off all balances each month, or keep a small balance if necessary until you can pay it down to zero. That way, you’ll get all the good stuff and none of the bad effects of credit cards.
grad school is not worth it
Many working adults fund and earn graduate degrees each year. Earning a master’s degree in your relevant field of work can be the most effective way to move up the career ladder. A large percentage of graduates turn to Serious Graduate Student Loans to cover some or all of your educational expenses. Keep in mind that while graduate school tends to be less than half as long as college, costs can be about the same because tuition and other fees are often higher than undergraduate programs.
Investing in stocks is too risky
There are conservative ways to take advantage of the stock market. Just because the current stock market is in bearish mode does not mean there are no opportunities for investors. In addition to shorting stocks and other assets that are on a downward trajectory, it is possible to find some stocks that have bottomed out in price and are possibly moving back up. The fact is that many investors make money in all kinds of market scenarios.
Renting is a waste of money
Sometimes it makes sense to rent a living space. While it generally makes sense to aim to own a home rather than reside in an apartment or rental home, there are some circumstances in which buying is not the smartest option. That includes economies like today’s, where prices for new and existing homes are at an all-time high, but rents are relatively reasonable. In most cases, the difference between renting vs owning a home It’s sensible. Often, that sounds like a situation where working adults can just rent for a year or so while they wait for home prices to come down.
Young adults have little use for life insurance
The best time to buy coverage is when you are young. People between the ages of 20 and 30 can get the best rates on life insurance coverage, mainly because age is the central factor that companies use when setting prices for particular amounts of coverage. Purchasing term or whole life policies can be a great way for young people to accumulate wealth, protect their financial interests, and provide for loved ones.