Personal Finance Myths, Are You Falling for These Personal Finance Myths?

Do You Fall For These Myths About Personal Finance?

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Personal finance myths, do you fall for these personal finance myths?

Close up of unrecognizable woman using calculator while looking through bills and house finances.

There is misinformation circulating in the 2020s. Perhaps the reason for all the myths, falsehoods and misconceptions is the thousands of sources online, some of which are of dubious origin. Virtually anyone with a computer can create an attractive website and publish whatever they want, so it’s relatively easy to fall for unsubstantiated facts and theories that travel in the guise of news. This is why it is essential that people consult the sources before trusting anything they find online.

Who are the main offenders these days? Certainly, the majority of pernicious and unverified data consist of suggestions and recommendations related to finance, accounting, budgeting and investing. There is a widespread mistake about the use of credit cards that continues to appear on news and economics websites with increasing frequency. Likewise, hundreds of internet-based opinion writers like to dismiss the value of earning a master’s degree.

Investing in the stock market and renting property are two other areas where you’ll encounter a ton of bad logic and downright bad advice. Purveyors of misconceptions claim that investing in the 2020s is a losing proposition and it never makes sense to rent out living space. Another pair of incorrect directives are related to real estate and life insurance. The mistaken beliefs behind them suggest that real estate investing is only for the wealthy and life insurance is not a smart buy for the young. Here are some of today’s top financial myths, along with the correct information about each one.

Credit cards should be avoided

Proper and careful use of plastic can actually improve your credit scores. Credit cards are on so many to-avoid lists that you’d think they were the worst thing ever invented. Instead, because they are abused and misused by many people, they have simply gained an undeserved negative reputation. Sometimes the path to wealth accumulation actually includes using the credit card. Avoid the drawbacks of plastic by only using one or two in your daily life. Aim to pay off all balances each month, or carry a small balance if necessary until you can pay it down to zero. This way you will get all the good and none of the bad effects of credit cards.

Graduate school is not worth it

Many working adults fund and earn graduate degrees every 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 Earnest Graduate Student Loans to cover some or all of their educational expenses. Consider that while graduate school tends to be less than half the length of college, the costs may be about the same as tuition and other fees are generally higher than for undergraduate programs.

Investing in stocks is too risky

There are conservative ways to profit from the stock market. Just because the current stock market is in bearish mode doesn’t mean there aren’t opportunities for investors. In addition to shorting stocks and other assets that are on a downward trajectory, it is possible to find securities that have bottomed in price and are potentially on their way up. The fact is, many investors make money in all sorts 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 instead of residing in an apartment or rental home, there are some circumstances where buying isn’t the most sensible option. This includes economies like today’s, in which new and existing home prices are at an all-time high, but rents are relatively reasonable. In most cases, the difference between renting and owning a home makes sense. Often this looks like a situation where working adults can just rent for about a year while they wait for house prices to come down.

Young adults have little use of life insurance

The best time to buy a blanket is when you’re young. People in their 20s and 30s can get the best rates on life insurance coverage, primarily because age is the central factor used by carriers when pricing particular coverage amounts. Buying term policies or whole life insurance can be a great way for young people to build wealth, protect their financial interests and support loved ones.

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