Four Myths about Personal Finance

There are a lot of financial myths out there that simply aren’t true! Making good financial decisions starts with having the correct information you need to make those decisions. I’m going to go through four common myths about personal finance to get to the bottom of those misconceptions.

1. “Paying rent is throwing away money.”

Paying rent is a living expense just like food, clothes, gas, or other transportation costs. This myth is usually coupled with “homeownership is the ONLY surefire investment” (which is also not true). Think about it: the point of paying rent is to have a place to live, right? So, if what you are paying for (a place to live) is getting you what you need, that is by definition NOT throwing away money. Owning a home is a big commitment and it isn’t for everyone. There are lots of pros and cons to this decision, so be realistic about your needs and which approach best meets those needs.

2. “Bad credit takes forever to rebuild.”

Good credit is an asset! Having bad credit can feel like a hopeless situation. There are some things that take longer to correct on your credit report, but that is not the same as hopeless. There are a few things you can do right away to put yourself on track to a higher credit score.

3. “I’m young – I have plenty of time to save for retirement!”

Being young is definitely a major advantage for retirement planning and the fact is, you do have plenty of time. The challenge is that you have no idea what that time will bring (both ups and downs), so the earlier you prepare, the less you will need to save as you get older. Check out this retirement calculator to see how much of a perk being young is when it comes to retirement planning.

4. “I’m old – it’s too late to save for retirement”

Every day is a new day. Although you can’t change the choices you made in the past (if you figure this one out, let me know, okay?), focus on what you can do now to prepare for life in retirement. This may mean making some adjustments to the traditional ideas of retirement – that can mean anything and you get to decide what it means for you. I changed careers at when I was over 40 because I simply wasn’t going to have enough to retire in my 60s. If retirement age is approaching fast and you feel like you’re running tight on time, start where you are now.

Get a clear picture of your current situation and then design your “encore” years. Once you know where you are going, you can create a plan to get there. I simply LOVE this woman’s approach to dealing with the shift in her retirement reality.

Take Charge of Your Savings
Earn rewards for creating a brighter future
Sign up to save more

Recommended Articles

5 Tips to Protect Your Credit After a Natural Disaster

Did you know your credit can be impacted by climate change? If you experience a severe weather event — like flooding, wildfires, or a hurricane — you might need to: On top of this, you’d still be expected to keep up with your normal expenses, like rent or mortgage payments, utility bills, childcare costs, and… Read more

Omar’s Story: Establishing Credit is the Foundation of Wealth

Meet Omar, a full-time college student living in San Francisco, CA with his parents and 21-year old son. What do you do? I’m studying behavioral science and addiction counseling at the City College of San Francisco. I want to be a part of the solution of dealing with all the pain that’s in the world—or… Read more

What Is a Credit Report?

Your credit report is a summary of all of your reported financial history. Keep a close eye on this to make sure that it is accurate because it determines your credit score. Checking your credit report is a first step to achieving some of your financial goals. It’s a good idea to check your credit… Read more