How do you know what personal finance information is true? Trying to find valid ways to manage your money is difficult, especially when you have one “financial guru” telling you one thing, and another telling you something completely different. Even the smartest of us can get fooled from time-to-time.
So, how are you being lied to? Here are a few myths about finance that you should be aware of:
Myth #1: Once you’re over 50, it’s too late to save for retirement
If you are 50 and have not started saving for retirement yet, you may struggle to keep up with your current lifestyle once you stop working; however, a smaller retirement fund is better than none. No matter how old you are, it is in your best interest to put aside a portion of your income for retirement.
Myth #2: There’s no reason to save for retirement when you’re still young
WRONG! People still fall victim to this very wrong opinion. It is never too early to start putting money away to secure a comfortable retirement. The sooner you save, the more your savings will grow.
Many South Africans don’t start saving as soon as they start working; they only start in their late 20s, 30s or close to 40. This results in them having lots to catch up on when it comes to saving, including the compounded returns they’ve lost out on over all the years.
Myth #3: The more expensive it is, the better it is
According to smartasset just because an item is very expensive, does not mean that it is of superior quality. A really good example of this is generic medicine. Although they have the same compounds in them as the original brands, they are far cheaper. If you just take a little time to do some research before buying specific goods, you will save a lot of money, while not compromising on quality.
Myth #4: You don’t earn enough money to save
Saving is absolutely essential, even if you’re only able to put aside a small amount every month. Saving needs to become your number one priority. This means that, before you spend your salary on anything else, put away money for savings.
Myth #5: You need to have credit card balances to improve your credit score
This is so far from the truth. Credit scores are influenced by a variety of factors, namely:
- Payment history – whether or not you pay your debts on time
- Number of credit accounts
- Credit utilisation – how much credit you’ve used in relation to your credit limit
- Credit age – how long you’ve maintained your credit
Myth #6: There’s nothing wrong with minimum monthly credit card payments
Minimum payments are traps! Credit card companies earn a lot more interest from customers paying minimum monthly payments on their cards. This means that you just end up paying a lot more than the original price of whatever you bought.
Myth #7: You need to invest in a new home as soon as possible
Many of us feel the need to buy a new home as soon as possible; however, you may want to take a closer look at the financial implications before jumping into such a big purchase. Each person’s case is different; however, when determining whether your should buy or rent a place, you need to consider quite a few important factors, such as:
- Can you cover all the upfront costs (which are usually a lot)
- Will your credit score allow for this commitment
- How long do you plan on living in the area
Are you battling with debt? Please don’t hesitate to contact Debt Rescue. Our aim is to help you become debt free in the shortest possible timeframe.