Are You Falling for These Personal Finance Myths?

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

Close up of unrecognizable woman using calculator while going through bills and home finances.

There’s misinformation floating around in the 2020s. Maybe the reason for all the myths, falsehoods, and misconceptions is the thousands of online sources, some of which are of questionable origin. Virtually anyone with a computer can set up a nice-looking website and publish whatever they want, so it’s relatively easy to fall for unsubstantiated facts and theories that travel under the guise of news. That’s why it’s essential for people to check out sources before relying on anything they find online.

What are the major offenders these days? Certainly, the majority of pernicious, unverified data consists of suggestions and recommendations related to finance, accounting, budgeting, and investing. There’s a widespread fallacy about the use of credit cards that keeps popping up on news and economics websites with increasing frequency. Likewise, hundreds of internet-based opinion writers enjoy dismissing the value of earning master’s degrees.

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

Credit Cards Should Be Avoided

Proper, careful use of plastic can actually improve your credit scores. Credit cards are on so many lists of things to avoid that you’d think they were the worst thing ever invented. Instead, because they are abused and misused by many people, they’re simply gotten an undeserved negative reputation. Sometimes the path to wealth accumulation does in fact include credit card usage. Avoid the downside of plastic by using just one or two in your daily life. Attempt to pay off all balances each month, or carry a small balance if necessary until you can pay it to zero. That way, you’ll get all the good and none of the bad effects of credit cards.

Graduate School Isn’t Worth the Trouble

Many working adults finance and earn grad degrees every year. Earning a master’s degree in your relevant job field can be the single most effective way of moving up the career ladder. A large percentage of degree earners turn to Earnest graduate student loans to cover some or all of their educational expenses. Consider that while grad school tends to last less than half as long as college, the costs can be about the same because tuition and other fees are usually higher than for undergraduate programs.

Investing in Stocks is Too Risky

There are conservative ways to take advantage of the stock market. Just because the current stock market is in a bearish mode does not mean there are no opportunities for investors. In addition to shorting stocks and other assets that are on a downward trajectory, it’s possible to find some securities that have bottomed out in price and are potentially on the way back up. The fact is that many investors make money in all kinds of market scenarios.

Renting is a Waste of Money

Sometimes, it makes good sense to rent living space. While it usually makes sense to aim for owning a home instead of residing in an apartment or rental house, there are some circumstances in which buying is not the wise option. That includes savings like the present one, in which the prices of new and existing homes are at an all-time high, but rents are relatively reasonable. In most cases, the difference between renting vs owning a home is sensical. Often that looks like a situation in which working adults can simply rent for a year or so while they wait for home prices to decline.

Young Adults Have Little Use for Life Insurance

The best time to buy coverage 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 carriers use when establishing prices for particular amounts of coverage. Buying either term or whole-life policies can be an excellent way for young people to build wealth, protect their financial interests, and provide for loved ones.

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