5 of the worst personal finance myths

No matter how much money we have, we could all probably learn something about making better financial decisions; however, there are several myths that can catch people out and cause you to make the wrong choices. Here we look at five of the worst and explain why you should not believe them.

Myth: you can’t afford to save

You don’t have enough to save

You may think that there is not enough money left at the end of the month to save; however, in the majority of cases, this is not true. According to a Money Advice Service survey, 40% of UK adults do not have a minimum of £500 in savings. Having a well-thought-out monthly budget not only helps you to spend more wisely and save but can also be useful for paying off debts through an IVA.

Saving money will earn you more

Saving money is a useful way to build up assets, but it is important to think about how you use these funds. Simply putting them in a standard savings account won’t amount to much, as interest rates are so low; instead, look for a strong investment if you want your money to grow.

Myth: there’s one right way to invest

Use a set formula for investing

An old adage is that you should invest in the stock market based on your age; however, there is no set formula that works for everyone’s financial circumstances. You should factor in your desire for risk, personal health and goals for retirement when deciding how much to invest.

Spend cash

Many people are under the impression that it is best to pay for goods in cash whenever possible. In some situations, cash can be helpful and give you a discount; however, it can also result in you having less control over your finances, resulting in you having to ask yourself is an IVA for me? A credit card helps you to see exactly where your money is going and often rewards you for spending.

Myth: the stock market is only for the wealthy

Only the rich can use the stock market

The stock market can be a scary proposition and it is often seen as the playground of the rich, but this is simply not the case. Information on companies can easily be gathered over the internet, commission rates are much lower and minimum deposits are not as high, opening the market to first-time and smaller investors.  Companies that allow you to invest like https://www.w2globaldata.com/an-idiots-guide-to-aml-kyc-id-verification/ will perform their AML Identity verification process and once complete you are good to go.

 

Summary

Understanding common personal finance myths can help people avoid costly mistakes. Many assume they can’t afford to save, yet a proper monthly budget usually finds room, while cash isn’t always the smartest way to pay since it offers less control than a card. Beliefs that there’s a single formula for investing, or that the stock market is only for the wealthy, are also outdated now that fees have opened it up to smaller investors.

Questions this article raises

• How much should someone realistically aim to save each month?
• Why do lower fees make investing more accessible now?
• Is cash ever genuinely better than card for budgeting?