Not all financial advice is worth taking. In fact, some money myths can set you on the wrong financial path. Here are some common money myths that you should avoid.
Focus Too Much on Credit Card Rewards
- Consumers focus too much on credit card rewards and too little on the cost of having that credit card. When choosing a card, consider whether you are someone who typically carries a balance. If so, you should look at the interest rate to determine whether this card is worth using. Also, consider the cost of owning the card: do the perks of having the card outweigh the annual fee?
- Consumers who spend more to maximize rewards could start a bad spending habit that’s hard to break. Consider using your card for things that you would buy anyway, and be sure that any additional charges you incur for using a credit card do not outweigh your reward benefit.
Buying a Home Builds Wealth
You’ve probably heard this adage many times: “buying is better than renting.” Well, it actually depends. Owning a home has many benefits, and can certainly save you money. But a recent study found that renting and reinvesting your money is a better way to build wealth than relying on fluctuating home prices. The cost of maintaining a home also falls on the owner. Understanding that cost is an important part of that equation.
Take Advantage of a Good Deal
Who doesn’t love a good deal? Whether it’s Black Friday or a Memorial Day blowout, consumers make purchases they don’t really need and often cannot afford. Impulse buying is very hard to resist, but if you wouldn’t consider the item when it was full price, you probably don’t need to buy it on sale.
Choose High-Interest Checking Accounts
Earning interest is important but if your checking account fees exceed the amount you’re earning in interest, it’s not a checking account worth having.
Keeping Track of Your Money is as Good as Budgeting
According to Dave Ramsey, knowing what you have in your bank account is not the same as looking forward at your expenses. Understanding what you can spend in the future, based on your income, is critical to making a smart financial plan.
The Rate of Your Monthly Services is Fixed
Quite the contrary. There’s a pretty good chance you’re overspending on your monthly bills. Fortunately, many fixed monthly expenses are negotiable. Billshark, a bill negotiating company, has an 85% success rate lowering monthly bills including internet, cable TV, wireless phone, satellite radio, and home security. The savings add up quickly.