8 Misconceptions About Personal Finance

Saturday, April 27, 2013

8 Misconceptions About Personal Finance

Reaching your financial goals is a lot more difficult when you don't understand proper personal finance. Identifying common misconceptions about personal finance can help you get through obstacles that are holding you back.
Image credit: dash / 123RF Stock Photo

I have to Save Every Penny to Get Anywhere Financially

You don't have to live on cheap food and give up all luxuries in order to save the money you need to pay off debt, go on vacations or buy a home. Using a budget will allow you to make spending priorities. Calculate how much you need to save each month to reach your financial goals, and set up a budget to show you where to cut back. Take the things you want most, like new clothes or eating out, and work them into your budget.

Only the Rich Can Invest
You don't need to be a millionaire to start investing. With the number of online investing companies available, you can start investing with as little as a couple hundred dollars. Choose your own investments or invest in a mutual fund and add what you can each month. It will grow over time.

You Must Avoid All Debt

Not all debt is severe. Student loans, mortgages and business loans can help you get what you need when you can't yet afford it. Working the monthly debt costs into your budget will allow you to determine if you can afford the loan. You can always pay off debt faster by putting extra money toward the principle.

A Financial Adviser is Required to be Financially Successful
Not all financial advisers in the industry have your best interests in mind. Those who work purely on commission may be more concerned with how often and how much you invest because that means more money for them. Choose wisely, and only use financial advisors in your area if you need one. If you're looking for financial advisers, start by getting references from friends and neighbors and research the web for more recommendations.

My House is an Investment

Owning your own home may be a dream come true, but it's not a good investment for most people. The return in the long run is typically much lower than other investments, but that doesn't mean it's bad  to own your own home. Just don't expect it to make you rich.

Investing for Retirement is for Older People

The best time to start investing is right now. If you start sooner, you don't have to set aside as much because you will have more time to accrue interest and capital gains.

Debit Cards are Better than Credit Cards

If you can responsibly use credit cards, you will also be using a form of payment that is safer with better protection and offers more rewards. With a free debit card, you could have money stolen from your account. If your bank refunds it to you, it may be days or weeks until you get it back.

I Can't Afford It
You don't have to give up your dreams because you think you can't afford it. Certainly there are moments when you should forgo expenses because you can't afford it, but sometimes you should do it anyway. Don't put off buying a house, having kids or going on your dream vacation for too long because it may never happen.

Author: Angela Prickette

No comments:

Related Posts Plugin for WordPress, Blogger...