There is no lack of money-related advice available today, thanks in large part to the plethora of personal finance blogs on the internet. 😉 You don’t have to look far to find tips and tricks on how to save money. In general, that is a good thing – unless you are receiving bad advice. If you are using tips on how to save money, and they are actually costing you money, you will need to correct that problem as soon as possible.
Following are four commonly repeated money myths. If you are currently trusting one of these myths to save you money, consider rethinking your approach.
Myth #1 – Everyone Needs Life Insurance
It is true that life insurance is a wise purchase for many people. However, it is a myth that everyone should have life insurance, and you may be wasting money on premiums each month if you fall into a category of people that don’t really need a policy.
For example, if you have children who are already self-sufficient adults, and your spouse can support himself or herself, it may not be necessary to take out life insurance. Remember, the insurance policy is there to protect your loved ones in the case of your death – but if you have self-insured, there may be no need to have a policy in the first place.
Myth #2 – You Have to Live On a Budget
Using a budget can work for some people, but in some cases, having a household budget will end up costing you money in the long run. How? Because, when money is placed into a budget to be spent, you run the risk of spending it even if it’s not needed.
I know this might fly in the face of what you hear other experts say. I’m not suggesting you spend money like crazy with no knowledge of it’s doing you any good. What I am saying is that a budget isn’t for everyone. If you’ve found a better way to manage your month-to-month finances then stick with it.
Myth #3 – Investing is Risky – Keep Your Money in Cash
In reality, you can’t afford not to invest. Now, that doesn’t mean that you need to rush into the next IPO offering and put your life savings into a young, unproven company. That would be a bad idea. Instead, look for relatively low-risk investments that provide you with the opportunity to grow your money gradually over time.
There can be a variety of ways to do this, but most will tend to focus on investing in low-cost index funds allowing them to stay with the market. If you don’t know where to start investing, make sure to check out my online brokerages page to get some ideas.
Myth #4 – Run Away From Credit Cards
There is nothing wrong with credit cards – in fact, they can be a very useful tool for building credit, enjoying payment protection, earning rewards, and more. There is, however, a problem when you start to carry a balance on your credit cards. If you are paying any amount of interest each month, you will want to work on eliminating that debt as soon as possible. When used responsibly, credit cards are an effective financial tool.
Have you heard any of these financial myths? What are some other common money myths you’ve heard or seen? What money myth have you fallen for?
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