Misconceptions about money keeping you from taking your finance game to the next level? Take note of these common money management myths!
Myth 1 – Only The Rich Can Invest
If this mindset is blocking you from considering investments, you need to read this. While those who have more disposable income can certainly invest well, it doesn’t automatically mean that the rest cannot. If you put your mind to it, you can always bifurcate a fair and reasonable section of your earnings for savings or investment – it doesn’t matter if you start small. The habit is more important than the amount. You can always scale up later.
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Myth 2 – Credit Card Balance Is Good For Your Credit Score
Nopes, while keeping your Credit Card active is wonderful for your Credit Score, not clearing your balance is not the best thing to do. In fact, settling your Credit Card bills in full every now and then is great for your Credit Score as it keeps you within a reasonable credit utilisation ratio, which in turn makes you look good in the eyes of banks and lenders.
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Myth 3 – Gold Is The Best investment
Thanks to its cultural and historical value, gold is deemed by most people as the best investment due to its physical attributes. However, one must keep in mind that gold is a very volatile investment. You’d rather consider a Systematic Investment Plan in today’s day and age, as you can never truly determine how fruitful your gold investment will be in the future.
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Myth 4 – Cash Payments Are The Best
This myth may also have conventional roots that are responsible for its existence. Our familiarity with cash as a medium makes us feel reassured when we carry out transactions by cash. In reality, it’s quite possible that cash may just be the most non-secure means of using money today.
Not only is physical cash vulnerable to theft, but it can also be damaged by weather and other external factors. In comparison, payments modes such as Credit Cards are far safer. For instance, many cards come with in-built fraud protection, extended warranties, and additional insurance. Let’s say you lose your Credit Card – you can always cancel it and get the card company or bank to help you out. On the other hand, there’s nothing much you can do if someone steals hard cash from you!
Myth 5 – Credit Cards Are Like Emergency Funds
While Credit Cards can certainly help you when you’re short of cash, they certainly aren’t substitutes for an actual emergency fund. In other words, if you’re under the assumption that owning a Credit Card makes you emergency proof, you’re wrong.
Let’s put it this way; your Credit Card is good for one-time or ad-hoc emergencies. However, a well-planned and long-drawn emergency fund can really come in handy when an unexpected event throws a curveball on your life and well-being.
Keep these 5 myths in mind when you’re plotting out your financial roadmap and you’re sure to experience a huge difference in your ability to manage your personal finances.