Since money means different things to different people, there is no surprise myths are abundant.
Friends, parents, teachers, and even those that you look as financial professionals, can perpetuate these myths.
therefore, we will examine five of the most common myths of money that you can believe.
Myth # 1: carry a balance on your credit card to help your credit score
no, you absolutely do not need to carry a balance on your credit card to do something to improve your credit score.
Many people think that paying the minimum due (or slightly above) is the best way to keep a healthy credit score. In fact, they are simply wasting money in the form of interest paid to the lender.
In order to have a strong credit rating, you must use your credit lines, which means you need a balance when your credit card statement arrives.
Having a statement of balance and achieving a balance are two completely separate things.
a statement of balance shows both the lender and the credit bureaus that you use your credit.
to demonstrate that you can use responsibility, you should aim to keep the amount of credit you are using less than 20%, which is available for you.
So, if you have three cards and a total of $ 15,000 in credit, do not spend more than $ 3,000 on your card in a given month.
once the balance of the statement arrives, you have to repay on time and in full.
Just pay the minimum or leaving a little on your card means that you pay interest.
pay your balance on time and in full even gives you a solid credit score.
Myth # 2: This debt is good
Ah, the old adage used to justify the debt. People believe that there is a difference between "good" debt and "bad" debt.
Going into debt to buy a house or get an education is often seen as "good" debt while accumulating charges on your credit card is considered "bad" debt.
To some extent, student loans and mortgage debt is "good." But there must be a cap on this mentality.
Do not buy more house than you can actually afford thinking it is debt "good". Do not go to the most expensive school you get because student loans are worth getting your degree
You should always aim to take the minimum amount of debt - .. Even when it comes to good debt
Myth # 3: I do not need a credit score
Yes, that would be a wonderful world if we could all just pay cash for everything, the weather. Unfortunately, it is not realistic -. Especially when it comes to buying a home or financing an education
but need a loan side, a credit score is also used by the owners to determine if you are a good potential tenant and even some employers run a credit check report (if employers will not see your score).
If you do not have a credit score, it is because there is nothing on your credit report.
The lack of a credit report and score can prevent you from getting a job, an apartment or an emergency loan.
maybe it is better to think of a strong credit score as insurance. You do not want to have to use it, but at least it is if you
Myth 4 :. I can wait to start saving for retirement
Too many people in their early 20s delay saving for retirement to think, "Hey, I have time."
Of course, you probably have 40 years until retirement. But the later you start saving, the less you'll actually have to live and be forced to stay in the workforce longer than you expected.
Compound interest causes drastic changes to small sums of money when given the gift of time.
If you invest $ 5,000 tomorrow and he earns an average 6% interest for 30 years, you will have $ 28,717.26.
Add the same amount of money another decade and you will almost double your money! $ 5,000 6% for 40 years yields $ 51428.59.
It is important to start saving for retirement as soon as possible.
The compound interest can work its magic on your money so that perhaps you will have the flexibility to leave the labor force in your 60s (maybe even earlier) instead of working well into your 70's
Myth # 5 :. credit cards lead to debt
When a credit card is used responsible, it can lead to a strong credit rating. But if you fail to adhere to two basic principles, it could land you in debt.
Do not spend more than you can afford. Tweet this
This is why it is important to set a budget and regularly monitor your bank account to ensure that you do not spend too much.
You can also pay your credit cards out throughout the month, so your bank account accurately reflects what you have spent. Remember to have at least one purchase on your credit card when your billing cycle so that you will show the use.
Pay off on time and in full cards.
If you pay your credit cards out of time and in full, it will prevent you from ever paying a penny of interest.
Fact Check
do not just get your financial information from a source. Always check what you have heard, because he could not really be just a myth of popular money.
What is one of your favorite money myths you've heard? Share in the comments below.
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