This post is in partnership with Lexington Law, thank you for supporting brands who support TCM. As always, all thoughts, opinions, experience, and advice is my own.
I'm doing a little MYTH BUSTING today on some common money misconceptions. And I've decided to switch things up a little! Before jumping into the post/video, let's do a little *quiz* and see how many of these money myths you are falling for?
So how did you do? 10/10? or 0/10?
Find out which one's you got right or wrong below!
MONEY MYTH #1: You should carry a small monthly balance on your credit cards each month so you can use debt as a tool.
FACT: You can 100% have an “excellent” credit score without ever carrying a monthly balance. In fact, carrying a balance month over month really doesn't hold a ton of weight in your “credit worthiness.” All your really doing at the end of the day is taking money out of your pocket and forking it over to the credit card companies in interest. Want to know what has a greater factor on your credit score? Paying off your balance in full every month on time! And if you want more tips on improving your credit score, I'll link a blog post below!
MONEY MYTH #2: Investing in the Stock Market is Too Risky.
FACT: Any investment, whether it's the stock market, bitcoin, or something else is a risk! While the stock market definitely has it's peaks and crashes, historically it always moves up over time so make sure you're following some basic investing principles to make a solid return on your money
MONEY MYTH #3: A home is a solid investment
FACT: Remember how I just said all investments are risky? Yeah that goes for your home too! While some housing markets will appreciate; a lot won't. It's 100% in the realm of possibility that your home could lose value over time. Furthermore, you're responsible for everything. New roof? New pipes? Lawn care? Oh and let's not forget unexpected life changes like a job transfer or illness that may cause you to have to sell while the market is down. Again this is for your home, rental properties are a totally different story, but if you choose to buy a home, don't look at it as an investment.
MONEY MYTH #4: Renting is basically throwing away money.
FACT: It's a necessity. Do you look at the money you spend on groceries or gas as thrown away? Nope! So why would you look at rent like that? All of them fall into necessities to live your life. And even if you own a home, you'll still be “throwing away” money on things like property taxes and mortgage interest. So if you're in my boat, renting and keep feeling pressured by family to buy a home remember it may not be in your best interest and do what feels right! Especially if you'll end up spending more on property taxes and your mortgage payments.
MONEY MYTH #5: I track my spending and know where my money goes, so I don't need a budget
FACT: A budget is a plan for your money – meaning it's future oriented. Knowing where your money is going in the present is great, but it's only one piece of the puzzle. If you have any financial goals (whether that's travel, a home, or planning for retirement) you need a budget to make sure you'll actually reach them.
MONEY MYTH #6: A penny saved is a penny earned.
FACT: Thanks to inflation and the rising cost of living, this simply isn't true. That penny is probably losing value as we speak which again is why it's important to have a budget and plan for your money.
MONEY MYTH #7: I'm too young / don't have enough money / have too much debt to start saving for retirement
FACT: You can open up a retirement account with as little as $50. Putting something away early on is better than nothing thanks to compounding interest. And since a penny saved isn't really a penny earned, it's better to check your budget and put that penny into your retirement account. You see how I just tied those last few myths together here? *wink emoji graphic*
MONEY MYTH #8: You have to pay back student loans before you start planning for a future.
FACT: There's such a thing as good debt vs. bad debt. Student loans fall into the “good debt” category meaning they aren't damaging your credit score the same way an outstanding balance on a credit card would. Furthermore, you should never put off paying yourself first in order to pay extra on a student loan. Focus on getting your emergency fund where you want it, putting money into a retirement account before paying extra on your regular student loan payments.
MONEY MYTH #9: The sale price is the lowest price.
FACT: Raise your hand if you ever bought something because it was a good deal? Oh yeah me neither. Truthfully think we are all guilty of buying things we don't actually need because the sale is just SO SO SO good – and at the end of the day buying something you don't need is never a good idea. Even more than that though, stores have gotten super sneaky with sales tactics. They even go as far as raising the normal price on an item, and then putting the “sale” price as the regular price. For example, the holidays are coming up and there's an item that's normally $100 the store wants to push this season, so they up the price to $120 and put it on sale for $100 to make buyers think they are getting a good deal when in reality it's the same price as it normally is all year. Second, a lot of stores will let you price match and add coupons, making an already reduced item potentially event cheaper.
MONEY MYTH #10: Cash is king.
FACT: While cold hard cash is great, you're missing out on goodies, perks, and rewards from credit card companies. If you're managing your money effectively, why wouldn't you want to get some cash back or other incentives for spending money you were already planning on spending? Plus, if you lose cash or have an issue, you can't track it and it's basically gone. Whereas with a credit card you can cancel it, and have protection in place for any fraudulent charges. Lastly, paying and using credit responsibly means a higher credit score and lower interest rates and other opportunities that paying only in cash won't get you.
There you have it! 10 Money Myths busted!
If you loved these then I highly suggest checking out the other myths my friends at Lexington Law busted in the links below: