3 money myths debunked
It seems everyone has an opinion on how to manage money. There is a lot of misinformation on money and personal finance out there, whether it’s from a motivational speaker discussing their own personal finance experience, a fintok star, or the mainstream media – it can be hard to decipher fact from fiction in deciding how to handle your own finances.
Today, we debunk some of the common money myths and uncover the facts.
Myth # 1: Consolidating your debt will solve everything
Wrong. Debt consolidation could help you manage your debt a little better by lumping it into one big payment and possibly lowering the interest rate to give you a longer period to make your repayments, but it won’t necessarily help you pay off your debt as it will always be there if no actions are taken.
Savvy Tip: Make a repayment plan and stick to it. Make sure you know your income, expenses, and the total amount of debt you need to repay. To help you get out of the debt cycle sooner, consider paying off more than the minimum every month!
If you want some more information about paying off your debts, check out this article:
Myth # 2: Cash is better than credit
We’ve heard this a million times, but is carrying cash or using a debit card in your digital wallet the best way to handle your everyday transactions? There is no definitive answer here, as it simply comes down to your spending habits.
Using cash, or the digital equivalent, can help over-spenders better track their outgoing expenses and stay on a budget, but it also has drawbacks. If your $50 note slips out of your pocket, it’s very hard to track it down. Most credit cards come with a fraud protection guarantee that helps keep your account safe from unauthorised transactions. Also known as zero liability or fraud money-back guarantees, these policies allow you to get a refund if fraudulent charges are made to your account. It can also include insurance coverage, extended warranty on purchases and so much more.
Savvy Tip: If you choose a credit card as your primary payment method, the right card for you will depend on what you need from a card and how you’re planning to use it.
Apply for credit if and when you really need it and always read the product’s terms and conditions before applying. Credit applications can impact your credit score so it’s worth checking out your credit score before you apply.
Credit Savvy members can track their score and check out what’s appearing on their credit report.
Myth # 3: It doesn’t matter which day you pay your bills
Actually it does matter what day you pay your bills! Paying your bills on the same date every month can not only help you stay on top of your repayments but also keeps you on track with your budget to know the exact amount you can work with each month and how much you can ideally save.
Savvy Tip: Comprehensive credit reporting information is reported on your credit file, so any late or missed payments to licenced credit providers – such as banks – from the last 2 years can now be recorded on your credit file and can impact your credit score. Set up direct debits so that your payments are made automatically!
Want to know more on how to monitor spends & stay on budget? The below articles can help you become a mindful spender:
Take the time to step back and consider how you are going to achieve your financial goals. There are a lot of different perspectives out there, so do your research before deciding what suits your circumstances the best.