If you are like many people, you believe that you are being prevented from being prosperous. In fact, this is not usually the case at all. Most often, your own false beliefs are what are holding you back. Whether you need help with student loans or are just trying to get out of credit card debt, here are six money myths that you can learn and disprove in order to regain control of your own finances.
1. Myth 1: If I get a raise and move to a higher tax bracket, I’ll bring home less money on my check. This is not true at all. The only money that will be taxed higher than usual is the money that goes into the higher tax bracket. Sound confusing? Here’s a little help. Let’s say you make $36,000 per year. Now, your income is actually taxed in three different brackets. The first $8,500 only has a 10% tax on it. All of the money from that until you get to $34,500 has a 15% tax on it. And anything over that has a 25% tax. This of course works as you go up the ladder. So, you will bring home a bigger check no matter what. (These figures were from 2011.)
2. Myth 2: Renting your home is a waste of money. This is a very common myth that many people believe to be true. It is not, though. Rent is a consumable. There are many consumables that you pay to use, and these are not a waste at all. And rent usually comes with the freedom of not having to pay for home repairs yourself. For example, if your water heater goes out, you don’t have to repair it on your own. Homeowners waste more money than renters in reality. They spend quite a bit more in interest over the years, and that money is literally nothing in return.
3. Myth 3: Higher prices mean higher quality. This is not always true. Thankfully, value does not correlate with price exactly. So, you can save money by looking for value instead of looking at the most expensive item. All you have to do is make sure that you do your research to find the item that is the best quality.
4. Myth 4: You have to have a lot of money to invest money. Although you do have to have some, you don’t always have to have a lot. And some don’t require an investment at all in order to open an account, although these are few and far between.
5. Myth 5: Keeping a balance on a credit card helps your credit go up. In fact, the opposite is true. It is better off if you don’t have a balance on the card, both for your finances and for your credit score. You should pay off your credit card every month if you have one so you don’t have to pay a ton of interest.
6. Myth 6: It is a great idea to buy your own home to improve your finances. Again, this is not really the case at all. While in the past, it was a major advantage to own a home, the real estate market is a very bad place to be these days. Inflation and the economy have actually caused a lot of houses to sell much lower than they are worth. And owning a home just isn’t worth what it used to be. If you believed any of the myths that were addressed in this article, then you understand where your errors were when it comes to your money. Now that you know the truth about the money myths that hold a lot of people back, you can get on the right track to improving your financial situation.