DEBUNKING CONTROVERSIAL MONEY MYTHS
Monday, July 25, 2022
At YNCU, we know that you take your finances seriously. You want to protect your financial assets as best as you can. There are a lot of widely held ideas about money that are simply not true. We want to help you achieve your financial goals by debunking some of the most controversial money myths. Here are five of the top money myths out there:
1. All Debt is Bad Debt
One of the most common money myths is that all debt is bad debt. This is simply not true. There is both good and bad debt. Good debt is money that has the potential to increase your net worth. Taking out a mortgage could be considered good debt because you are able to make more money off that asset as time goes on. Bad debt involves using money on something that slowly loses its value. Some purchases that depreciate in value, like buying a car to commute to work, can be critical. Bad debt is debt for frivolous items that depreciate in value and don’t help you earn money. Furthermore, these debts can often hold very large interest rates.
It is a common belief that all debt is bad debt, but good debt can actually help you gain more money by borrowing. In order to make more money, you need to use outside resources and rely on other people to help. Good debt has the ability to enhance your life in a positive way.
2. Buying a Home is Better Than Renting
It is a long-held belief that your home is your biggest asset. Renting is considered to be throwing your money away. The truth is renting provides you with flexibility, since it is a lot easier to move when you are renting. The prices of houses have been skyrocketing for the last few years and many people do not even have the funds to consider buying a home. There are a lot of benefits from renting that are often overlooked. With the housing market and taxes, buying a home versus renting might not be the best way to achieve your financial goals in the future.
3. Only Save Big Amounts, Don’t Waste Time with Small Sums
Some people believe it is a waste of time to set aside small amounts into your savings every month. They think you should only set aside money when you are able to put aside large sums of money. This is far from the truth. Saving little by little will make a huge impact in the long run. Savings accounts hold interest and the longer you hold money in the account, the more interest you will accumulate. This means that putting aside small sums can add up to more than what you put away over time.
4. Don’t Need to Look into Retirement When You are Young
When you are first starting your career, you may not be considering retirement savings. You may think that because you are so young, you do not need to look into retirement right away. In reality, starting to save as soon as possible will allow you to not have to worry about retirement. You will achieve your goals earlier when you start earlier. Life is unexpected and you will never know when you want to pull out your retirement savings. Starting a plan now could mean you are able to retire sooner.
5. Avoid Credit Cards
People often avoid using a credit card because they believe it will lead to large amounts of bad debt. This is not necessarily true as, if you pay your credit card regularly, there will be no issues and you will be able to build good credit. Having a good credit score will help you get approval for mortgages or other loans. This score proves you are able to pay back bills. By avoiding a credit card, you are also avoiding building good credit.
There are a lot of money myths and bad financial advice out there. If you are looking for a financial institution that tells you the truth about your money, become a member online!