There are many things we’ve been told throughout our life that pertain to money. The problem is that some of those things aren’t true. Believing these myths can lead us to make poor financial decisions. Whether it’s using credit cards for emergencies or always carrying a car payment, there are financial myths that you need to stop believing.
Credit Cards Are for Emergencies
Credit cards are perfectly okay to use if it’s an emergency, right? Wrong. That’s what an emergency fund is for. You want to build an emergency account of at least $1,000. This is for small emergencies, such as car repairs or unforeseen medical expenses. You want to be able to take care of emergencies without reaching for a credit card.
Debt Is Essential for Building Credit
No, it’s not. Debt doesn’t do you any favors whatsoever. All debt does is make your life stressful. If you really want to build credit, charge purchases that you can pay off as soon as the bill arrives and NEVER carry a balance.
We Need to Help Our Extended Family
Your cousin or brother is in financial trouble and needs a loan from you. You’re obligated to help, right? No. In fact, lending money to relatives is one of the worst mistakes you can make. It creates so much tension, especially if your family member isn’t making an effort to pay you back. Never lend money to friends or family members (but if you can and want to help them, you can give them a gift).
College Requires Student Loans
You need to get a student loan in order to go to college. Nope. There are so many other ways to fund your college education that don’t require going into debt. You can work part-time, attend community college for your core credits, apply for grants and scholarships, etc. Don’t assume that it’s okay and even expected to go into debt.
Car Payments Are Part of Life
People often say that you’re either making a car payment or paying repair bills. The thing is if your car is well-maintained, you’ll have a lot fewer repair bills than you would car payments. If you know that your car is starting to show some age, start saving money to invest in a newer car.
These financial myths have been around for so long that many people believe them to be true. Question the things that seem to good to be true. If it seems wrong, or too easy, chances are it’s a myth.