3 money myths debunked
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 financial advice column in the magazine or an advertisement on TV, these sources and statements can easily cloud your judgement to decide the best way 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 debt repayment plan and stick to it. Make sure you know your income, expenses, and the 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’re really serious about paying off your debts, check out our articles on ways to get on top of your debt:
Myth # 2: Cash is better than credit
We’ve heard this a million times, but is carrying cash or the plastic equivalent (a debit card) the best way to handle your everyday transactions? There is no definitive answer here, as it simply comes down to your spending habits.
Carrying cash can help over-spenders better track their outgoing expenses and stay on a budget, but it also has drawbacks. If it gets stolen, it’s untraceable, whereas some credit cards, such as Mastercard and VISA 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: Using cash or credit cards both consist of pros and cons, at the end of the day, it is how and what we spend it on. If you choose 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.
As we always say, only apply for credit if and when you really need it and always read the product’s terms and conditions before applying.
Keen to learn more about credit cards? Read the related articles here:
Myth # 3: It doesn’t matter which day you pay your bills
It sure does! Paying your bills on the same date every month can not only help you stay on top of your repayments but also keeps you stay 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 now being reported on your credit file, so any late or missed payments to licenced credit providers 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:
There’s never a bad time to step back and evaluate what you’re doing to achieve your financial goals. With all the different perspectives out there, always give what you hear some thought and research before deciding what’s best for your financial circumstances.