Myths about money can stand in the way of making the most of your finances. Here are 5 money misconceptions to avoid to help you budget, save, and invest wisely.
1. I’m too young to save for retirement now.
When you’re young, retirement can feel like it’s very far away. But time is the secret ingredient — having all those years to save can be beneficial for your future. Whether you are contributing to a 401K or decide to open an IRA, saving now for the future is imperative.
2. I don’t need to budget if I have enough money.
A budget can help manage your money and track your spending. Everyone could benefit from developing short- and long-term financial goals, and even if you have no debt, a solid budget is a great way to get started.
3. Having a credit card will only cause debt.
When you tend to spend beyond your means, having a credit card can be risky. But your credit card shouldn’t automatically equal debt if you use it in a smart way. Paying off the monthly statement will not only help you stay clear of debt, but it can also help improve your credit score.
4. It's not worth saving if I can only contribute a small amount.
Saving any amount, even if it is only five percent of your paycheck, will accumulate in the long run. It is better to save whatever amount of money you can now and gradually contribute more when you are able to. After all, a little can go a long way!
5. Investing is only for rich people.
In the past, investing might have been only for people who have a lot of money. Today, this is a myth. You don’t need a substantial sum of money to begin investing. Many investment platforms make it easy for people to invest with varying budgets. Keep in mind that you can begin with a small amount of money and gradually increase your investments over time. As market conditions change, a financial advisor can help you review your goals and make adjustments to your investments as needed.
Whether you are feeling financially secure or are looking to better manage your finances, practicing good financial habits will serve you well in the long run. To learn more about how to take charge of your finances, visit My Money 101 for free, interactive tutorials that are packed with information to help you reach your financial goals.
Sourced from Understanding 18 Common Myths About Money | SoFi