Personal Finance Myths vs. Reality

By  //  August 3, 2023

As the national economy worsens, millions of working adults and college students wonder how they can get a better grip on their personal finances. However, it’s wise to avoid falling for the most common myths and falsehoods that make the rounds whenever times get tough.

What kinds of things are you apt to hear on the social circuit, on discussion forums, and elsewhere? 

For starters, always be cautious when someone advises that aggressive investing is the most efficient way to create financial security. Likewise, don’t believe those who claim that college students are ineligible for credit cards. The main thing to remember about questionable financial information is to check out anything that sounds suspicious or appears too good to be true. Other frequent areas where there’s a lot of mythmaking include life insurance, saving, and retirement accounts. Here are pertinent facts about the current crop of pernicious personal finance myths.

Aggressive Investing is the Road to Wealth

The long-term way to build wealth and financial security is to invest conservatively, even though there are exceptions to the rule. In difficult economic times, this mythical idea gets traction among the desperate. Aggressive investing can deliver large payouts, but it can also decimate a person’s portfolio and personal wealth in short order. For young adults who need to save and pay off debt simultaneously especially, the wise way forward is to build wealth by slow, careful investing. Diligent individuals prefer to choose stable asset classes and vary the mixture of portfolio components among stocks, bonds, precious metals, mutual funds, commodities, and more.

College Students Can’t Get Credit Cards

Financially responsible students can and do get credit cards. Anyone currently attending college can and should apply for a credit card if they don’t already have one. However, it’s imperative to gather all the relevant information first. Review a commonsense guide that explores all the facts about student credit cards, how to apply for them, and how to select one that suits your financial situation. Young adults who can manage their money and living by a monthly budget can do themselves a favor by selecting an appropriate card and beginning to establish a financial history. Far from being impossible for students to get cards, as the myth implies, the opposite is true. Qualified applicants have multiple options; the main challenge is knowing which one to select.

Life Insurance is Expensive & Unnecessary

There are plenty of bargains in the insurance market, and it’s important to have coverage at any age. Unfortunately, there are dozens of insurance-related myths. The one about life policies being costly and unnecessary is near the top of the list. Some of the best life insurance policies for younger adults have prices for coverage are particularly low. About necessity, it’s essential to have some coverage if you plan to get married and raise children.

Most working adults have at least one policy in place by the time they reach retirement. Single adults purchase coverage to leave a legacy to charitable organizations or surviving relatives. Plus, it’s usually possible to sell a policy for its cash value should you ever need funds in an emergency.