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5 Common Money Myths, Explained

Nov 9, 2020

5 Common Money Myths, ExplainedThis past year has been riddled with financial uncertainty, and there are many myths floating around that have the potential to impact how you view, save, and spend your own money. Below, we’ve listed and debunked five common money myths so you can better understand and manage your finances.

Myth #1: “I don’t have full control over my finances.”

You may feel like you don’t have full control over your finances, or that you’ll always struggle—especially considering the current state of the economy. But, there are actually many ways you can take control over your money, whether that’s taking advantage of employee benefits like investing in company stock or having your employer match your 401(k) contributions, asking for a raise when deserved, and seeking out educational resources to find other strategic ways to make the most of your income. Educating yourself on the various nuances of personal finance can help you feel like you have more control and autonomy when it comes to managing your money, so take advantage of any resource you can find!

Myth #2: “I don’t have enough money to justify consulting a financial advisor.”

What many people don’t know is that there are actually financial advisors who will take you on for free while they help you build your financial portfolio and understand your finances, especially if you just graduated from college or have recently entered the workforce. No matter how young you are, it’s never too soon to turn to a financial advisor or educator for guidance, as they can be helpful in identifying and making strategic investments, creating wealth-building strategies for the long term, or even kickstarting saving for retirement.

Myth #3: “I need to spend a lot on my loved ones to show I care.”

As you begin preparing for the post-COVID wedding/major celebration boom, it’s more important than ever to prioritize your own financial health and goals. There’s an immense amount of pressure to be a “Yes Man/Woman” and give the best gifts, host the best parties and showers, and spoil loved ones on their big day. But it’s critical that you approach these types of events strategically by creating a budget or even designating some of your savings account to things like gifts and labeling them as such. That way, you’ll have a clearer picture of where your money is being spent. Loved ones will love you regardless of the gift you give them, and sometimes you have to put yourself first!

Myth #4: “Having multiple lines of credit is bad.”

There is a common misconception that opening multiple lines of credit can be detrimental to your overall credit score, but this isn’t true, especially if you’re strategic about it. Whether you choose to open a line of credit with a clothing store you already shop at, a wholesale retailer like Costco or BJ’s, or some other type of business, you can get cash back for things you’d spend money on regardless, unlock additional savings that may not have been available before, or get discounts on restaurants, travel, or gas, among other benefits. What’s most important, though, is that you compare and contrast each type of card that you’re considering and decide whether or not it’s the right fit. And of course, pay your balance in full every month.

Myth #5: “The safest place to stash your cash is under your bed.”

People used to recommend stashing cash under your mattress because they thought their money was safer in their own home, but these days, your money is actually better off being stored in a higher yield savings account where it has the chance to grow with interest and can’t be misplaced or stolen. Credit unions and banks offer so many more ways to save and grow your money than they did before. For example, at PFCU you can open a separate high-interest savings account to stash this money so you won’t be tempted to reach for it and spend it all in a moment’s notice.

While the internet offers a vast amount of information and resources, you can’t always believe everything you read online—especially when it has to do with money! It’s important that when you come across a claim like the ones above that you take the time to do some research and fact-check the source before you let it impact how you treat your finances.  

erin_elis

Erin Ellis
Accredited Financial Counselor
Philadelphia Federal Credit Union
eellis@pfcu.com

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