Sometimes it\u2019s difficult to spot the difference between good and bad advice. Amidst questionable suggestions from family and friends, contradicting web searches and the hundreds of \u201cget rich fast\u201d books at your local library, it can be especially hard to know what financial advice is worth your time.<\/p>\n\n\n\n
In this blog, we\u2019ll explore 11 common personal finance myths, clear up the misinformation and uncover the truth.<\/p>\n\n\n\n\n\n\n\n
This is false. Retirement savings rely on time. The sooner you begin to save for retirement, the longer that money has time to grow.<\/p>\n\n\n\n
Most financial planners suggest that you put 10% to 15% of your income towards retirement<\/a>. They also recommend that you start saving in your 20\u2019s. If that percentage isn\u2019t possible yet, that\u2019s okay! At the very least, make an effort to meet any retirement matching perks that your employer has to offer. You can always increase your contributions as you earn more over time. <\/p>\n\n\n\n Many people are hesitant to request copies of their credit reports out of fear that it could affect their credit score. Fortunately, this isn\u2019t true! To better understand this, it\u2019s important to know the difference between these two types of credit inquiries:<\/p>\n\n\n\n Checking your own credit regularly (which is considered a soft inquiry) can help you better understand your lending history. It also allows you to detect any inaccuracies or fraudulent activity. You\u2019re entitled to a free copy of your credit report every year<\/a> from Equifax, Experian and TransUnion – be sure to take advantage of it!<\/p>\n\n\n\n One of the most common misconceptions about budgeting is that it cuts out all of the fun things in life. Sure, you can build your budget that way, but we definitely don\u2019t recommend that! <\/p>\n\n\n\n Rather than thinking about the restrictions of budgeting, focus on the freedom it gives you. Were you ever worried about whether or not you have enough money to make a necessary purchase? Have you felt unsure of how much money you have and where it\u2019s going? Have you caught yourself wondering if a lingering subscription or unused gym membership is sucking your checking account dry?<\/p>\n\n\n\n Budgeting allows you to create a clear map of your finances<\/a> and truly understand where your money is going. By mapping out each month\u2019s necessary financial commitments, you can calculate what\u2019s left over, which gives you more freedom to decide what to do with the extra cash.<\/p>\n\n\n\n Debt is complicated and hard to categorize. You may have heard that \u201cgood debt\u201d is money owed for things that could increase in value over time, like student loans, small business loans or a mortgage. \u201cBad debt,\u201d on the other hand, might refer to things that won\u2019t increase in value over time, like credit card debt, car loans or other consumer debt.<\/p>\n\n\n\n While it may feel easier to slap a simple label on an investment, debt is much more nuanced. Here are some examples:<\/p>\n\n\n\n Ultimately, debt is debt – it\u2019s value depends on your level of risk and what you consider to be rewarding.<\/p>\n\n\n\n This old and common myth is not true. When you don\u2019t pay off your credit card balance every month, you\u2019re still responsible for paying that money back PLUS interest. This only increases the amount of debt you owe, which can lead to a decrease in your credit score.<\/p>\n\n\n\n Rather than carrying a balance, credit card users should strive to pay as much of their balance as they can every month. This keeps your credit utilization ratio low, which can increase your score.<\/p>\n\n\n\n Credit cards come with many pros and cons. On one hand, they can help you build credit<\/a>, cash in on store credit<\/a>, and allow you to make more secure payments with their fraud protection benefits. Unfortunately, credit cards can also come with high interest rates and steep fees, leading those who fall behind on payments into massive amounts of debt.<\/p>\n\n\n\n Everyone\u2019s experience with credit cards is different, but they can be beneficial if used carefully. If you\u2019re struggling to pay back what you owe, you may want to consider your credit card debt help & consolidation<\/a> options.<\/p>\n\n\n\n Similar to other chores and obligations, it\u2019s common for one spouse or partner to take the lead on taxes, budgeting and important financial matters. If you\u2019re not the one taking charge, that doesn\u2019t mean you can put all thoughts about money on cruise control. <\/p>\n\n\n\n While we definitely don\u2019t wish for the worst to happen, divorces, medical emergencies and sudden deaths happen every day. Should your money-savvy partner not be there to take control of your joint finances, you\u2019ll need to be able to take the reigns and manage them on your own. Both partners should have a good understanding of your joint budget and know where to access your emergency fund. <\/p>\n\n\n\n In addition to discussing money openly with your partner<\/a>, it\u2019s important to work as a financial team. Managing money can be a stressful task; while it might not be your biggest strength, a helping hand may be greatly appreciated!<\/p>\n\n\n\n We get it – you\u2019ve worked hard to build your emergency fund<\/a>. It may seem too complicated to store it in a separate place from the rest of your money. It also might feel like a waste to keep it out of a money-making opportunity, such as a Roth IRA, stocks or a CD. <\/p>\n\n\n\n Your emergency fund was built to be used in case of a true emergency. It needs to be ready to go at a moment\u2019s notice. Pulling cash that you\u2019ve invested can take time, and a short-notice withdrawal sometimes comes with additional fees. Additionally, keeping your emergency stash in the same place where you keep your \u201ceveryday use\u201d money increases the risk that you might spend it accidentally. <\/p>\n\n\n\n You can still keep your money liquid while earning some interest. Consider putting your emergency fund into a high yield savings account.<\/p>\n\n\n\n While taking care of yourself isn\u2019t necessarily a new concept, the term \u201cself-care\u201d has become increasingly popular. Unfortunately, it\u2019s often misinterpreted and used as an excuse to splurge on an irresponsible purchase, make unhealthy choices or avoid taking care of something important. <\/p>\n\n\n\n Ultimately, self-care is an act that contributes to your mental, emotional or physical well-being. It also doesn\u2019t have to come with a price tag! Some free and nearly free self-care examples include guided YouTube yoga videos, catching up with a good friend, going on a walk in the park, checking out a good book from the library or going to bed an hour early. There are plenty of free things you can \u201ctreat yourself\u201d to that will help you feel like a million bucks.<\/p>\n\n\n\n If you\u2019re being held back by a low credit score, it may seem impossible to fix. Fortunately, you should be able to improve your credit<\/a> over time by incorporating some new habits and strategies. Disputing inaccuracies in your credit report, paying down your outstanding debts, and building a history of on-time bill payment can all help to boost your credit.<\/p>\n\n\n\n If you\u2019re older, it may feel impossible to work your way out of debt, save for retirement or build your own business. Good news: there\u2019s no time limit on getting started. <\/p>\n\n\n\n \u201cIt\u2019s never too late to change your financial destiny,\u201d Certified Financial Planner Marguerita Cheng writes<\/a> in her piece for Business Insider. \u201cA few slight changes now can have a significant impact on where you\u2019re at in five, 10, or 20 years.\u201d Sometimes it\u2019s difficult to spot the difference between good and bad advice. Amidst questionable suggestions from family and friends, contradicting web searches and the hundreds of \u201cget rich fast\u201d books at your local library, it can be especially hard to know what financial advice is worth your time. In this blog, we\u2019ll explore 11 common […]<\/p>\n","protected":false},"author":3,"featured_media":1474,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","footnotes":""},"categories":[50],"tags":[],"class_list":["post-1472","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-planning"],"accredited":{"author":{"name":"Mikaela Sullivan","url":"https:\/\/www.accrediteddebtrelief.com\/blog\/author\/msullivan\/"},"categories":[{"name":"Financial Planning","slug":"finance-planning","url":"https:\/\/www.accrediteddebtrelief.com\/blog\/category\/finance-planning\/"}],"thumbnail":"https:\/\/www.accrediteddebtrelief.com\/blog\/wp-content\/uploads\/2020\/12\/820x312_ADRBlog_11MoneyMyths_v1.jpg"},"acf":{"edited_by":"","reviewed_by":"","fact_checked_by":""},"yoast_head":"\n#2 – Checking my credit report will hurt my score.<\/h2>\n\n\n\n
\n
#3 – Budgeting is restrictive.<\/h2>\n\n\n\n
#4 – There are \u201cgood debts\u201d and \u201cbad debts\u201d.<\/h2>\n\n\n\n
\n
#5 – Carrying a balance on my credit card every month can increase my credit score.<\/h2>\n\n\n\n
#6 – Credit cards are financial traps.<\/h2>\n\n\n\n
#7 – If my partner manages our money, I don\u2019t need to look at our finances.<\/h2>\n\n\n\n
#8 – I can put my emergency fund in stocks or a CD, or I can keep my emergency fund in my regular savings or checking account.<\/h2>\n\n\n\n
#9 – Self-care costs money.<\/h2>\n\n\n\n
#10 – I\u2019ll never be able to fix my credit score.<\/h2>\n\n\n\n
#11 – It\u2019s too late to reach my financial goals.<\/h2>\n\n\n\n
No matter your age, you can still make adjustments to your retirement contributions, pursue a business or work your way out of debt<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"