Learning how to budget and save wisely is a hallmark of becoming an adult. However, many common money myths will take you down the wrong path! Let’s bust the most popular myths and legends…
Debt Is Essential
Sometimes it’s hard to imagine lives without debt. People find themselves in debt for nearly everything, it seems: going to college, buying a car or house, even going on vacation! However, debt does not need to become a regular part of life. “Debt adds considerable risk, most often doesn’t bring prosperity, and isn’t used by wealthy people nearly as much as we are led to believe,” said Dave Ramsey, author of The Total Money Makeover. Of course, not going into debt often means living a tad humbler than others. For instance, start using cash, instead of a credit card. As Ramsey likes to say, “live like no one else, so that you can live like no one else.
Still, this doesn’t mean you always have to forgo credit cards. If you’re incredibly confident you can pay the card on time, some rewards can make a card worth it. “Many credit cards have reward programs that allow you to earn points or money back simply by using them,” stated Jennifer McDermott, who works on the personal-finance site finder.com. Meanwhile, paying a card back on time can also result in a rising credit score!
Get Everything When It’s On Sale
It’s always better to pick up something on sale, right? Well, not always, actually! Believe it or not, sales are designed as traps for naïve shoppers! They are created to entice the shopper to pick up other things they notice while on the way to the sales item. Other times, the sales can seem massive, but only because the store jacked up the price before cutting it. “In our eagerness to save money on expenses, believing you’re getting a bargain can financially punish you in the long run,” said Chelsea Hudson, personal finance expert for TopCashback.com. “Often, you are still wasting money. False economies include bulk buying, inadequate insurance policies and picking price over value.”
Buying Used Vehicles
Another common money myth? You should always pick up a used car. While buying used might save you a bit in the meantime, often a new vehicle with a well-negotiated car loan can be the better deal. Finder.com did the math and found out that picking a used car only saves the owner about $500 in total. “Meaning that in the long run, the newer car will stretch your dollar further after taking into account additional costs such as insurance and maintenance,” said Jennifer McDermott.
You Need A Degree To Create A Budget
Sometimes, creating a budget can seem like an impossible task. However, these days, it’s easier than ever to create a budget! From financial blogs to incredible apps, it’s possible to create a budget with a few clicks! “While a line-by-line Excel spreadsheet may be a bit much, there are plenty of alternatives that are less restrictive and less maintenance that can still be useful in keeping you on track,” said Chelsea Hudson.