Popular Financial Myths Debunked

The Financial Educators Council reports that the majority of educators in the United States have no formal financial training or financial education and would not be comfortable teaching a financial literacy course to students.  Most people don’t learn a lot of facts about money or their finances, which can make it really difficult to make smart financial choices that help you to be prepared for your future.

Unfortunately, a lack of formal financial education also makes many people vulnerable to believing myths about their money.  It is important to learn the truth about the type financial myths so you don’t end up falling into financial traps.

Popular Financial Myths Debunked 

Here are a few key financial myths that many people mistakenly believe:

  • It is impossible to get a loan without having good credit 

 photo credit_zps8a6022fa.jpg

The reality is that it is very possible for almost anyone to get a loan, even if they do not have a positive credit history.  In fact, if you have no credit score or history, or if you have a bad history, there are still loan alternatives out there that you can explore.

By visiting LoanMaxTitleLoans.net, you can find out information about a car title loan, which may be a viable solution if you need to borrow money and have bad credit.  A car title loan lets you tap into the equity in your vehicle in order to borrow money.  You can still keep driving the car and don’t lose your vehicle when you take a title loan. The loan is available to help you with a pressing financial need and you get the car title back when you have repaid the debt.

  • You must have a credit card balance in order to develop a positive credit history

 photo credit_card_balance_zpsaf05dfeb.jpg

A lot of people mistakenly believe that you have to carry a balance on your credit cards so you can establish a good credit history and get a good credit score.  This is actually not true at all. As long as you have credit accounts and you pay them on time each month, you can develop a positive credit history regardless of whether you ever carry a balance or not.

Carrying a balance ends up costing you a lot of money in interest for virtually no reason. This makes all of your purchases more expensive and it makes it harder for you to get ahead.   By paying off your credit card bills in full every month, you can still build a good credit score and you won’t waste money.

  • Real estate behaves differently than other kinds of investments

This is one of the top 10 financial myths highlighted by Kiplinger.   Many people believe that real estate will always go up over time and that they cannot lose money on real estate. Others believe that real estate investments do not correlate directly with the return on stocks or other financial instruments.

The reality is that real estate as an investment just like any other, and it has risks like any other. Prices can rise and fall based on supply, demand, external market factors and a whole host of other things.  You can make money on real estate if you hold your real estate long enough and sell at the right time, but this is true of pretty much any investment that doesn’t go bankrupt. Since you never know when you’ll need to sell or how long it will take for real estate to go up, you cannot count on it being a sure money maker for you.

An expectation that real estate would always rise in value was one of the major driving factors that led to the financial crisis and foreclosure disasters that began in 2008 and that are still having ripple effects throughout the economy.   People took mortgage loans they couldn’t really afford because they assumed their house would increase in value and they could refinance or sell. The events of 2008 should be enough to show everyone that this is not necessarily going to be true.

Do Your Research When Making Financial Choices 

 photo research_zps9f38ddb9.jpg

These are just some of the many myths that people have about their finances and their money.  It is important to do your research and learn as much as you can before making any financial decisions so you can ensure you are making the right choices for you and your family.

Featured images:
  •  License: Image author owned
  •  License: Image author owned
  •  License: Image author owned

Jessica Pratt loves getting to the bottom of an issue. She has the sniffing out skills of a reporter, and the financial acumen of an accountant. Follow her for no BS financial advice.