Cut Through the Nonsense of These 3 Common Financial Myths

August 22, 2018

You’re living in the Information Age — a time when you’re processing the equivalent of 174 newspapers worth of a data every day. Between the phone in your hand, the laptop at your desk, and the TV screens in your living room, there’s a near constant bombardment of information. It’s impossible to keep track of everything you see and hear, so some things are bound to get a little muddled. It’s almost like a game of a telephone; your friend tells you about an article their aunt shared on Facebook. Something inevitably gets lost in translation, and you’re working with half-truths and missing information. If you’re not paying attention, you could easily believe the following three myths about your finances.

Myth #1: Cash Trumps Credit

One of the most common pieces of financial advice is that cash is king. It’s suggested by financial advisors and laypeople alike because it’s impossible to spend more than you have when you operate on cash. While that’s true, it’s also an old-fashioned way to use your money.

You’re missing out on a lot of savings of the modern world when you use only cash. Though many people view credit cards as a financially risky product, they’re an important tool to have in your financial arsenal. They help pay for expensive items when you don’t have enough cash, and they help build up healthy credit. They also offer a ton of rewards with opportunities to earn cash back, travel points, and other extra bonuses. The trick to making sure these rewards are worth using credit is paying off your balance in full each month.

Myth #2: A Savings Account Is the Best Way to Save

A savings account has ‘savings’ in the name, so it must be your best bet, right? While it used to be an effective way to set aside cash, now it’s little better than storing your cash in a hole you dug in your backyard. Few basic savings accounts offer an interest rate that can compete with the rate of inflation. That means the purchasing power of your money in this account will decrease as time goes by. That’s because inflation will increase the cost of living by a greater amount than you are earning interest.

While the bank has savings accounts with higher interest rates, these often come with higher minimum balances or fees — making it hard for the average person to qualify for one.

Alternative financial resources like mobile banks, robo-advisors, and ETFs are offering a different way to save. Mobile banks mimic the traditional savings account but with higher interest rates and added features like automatic contributions and rounding services. Meanwhile, robo-advisors and ETFs are simple ways for market shy individuals to invest in passive portfolios that promise greater growth over the long-term.

Myth #3: A Bank Is the Only Place to Get a Loan

A savings account isn’t the only way the average retail bank is failing its customers. Complicated red tape and lengthy processing times involved in financial assistance are also another way banks make it hard to manage your money. While these banks are ideal for larger loans like mortgages and business loans, online lenders offer a speedier alternative for short term goals, like paying off bills or making household repairs.

Alternative lenders like MoneyKey have removed many of the barriers that complicate and delay your borrowing experience. These lenders offer quick payday loans online, so you don’t have to waste any time with time-intensive meetings like you would at the bank. These online loans process applications quickly, so you can receive a cash loan fast.

Nearly 60 percent of people share an article to their friends and followers without reading it. While a depressing fact in its own right, it’s this habit that breeds misinformation over the Internet. Between Facebook feeds, Instagram accounts, news apps, and podcast streams, there’s a lot of information to parse through. It’s inevitable that some wrong facts break through your usual fact-checking defences. Now, these three financial myths won’t be one of them, so you can make better choices regarding your spending, savings, and borrowing opportunities.


4 Comments

  • Carol

    August 24, 2018

    Couldn’t agree more with this, especially about cash. Have tried as an experiment working on only cash for a few weeks. But in all honesty, I felt embarrassed producing cash at the checkouts! With a spreadsheet and a basic budget, there’s no reason why you can’t work successfully with your card when paying for everything.

    Reply
    • Kit

      August 27, 2018

      I hear you, Carol, perhaps because I’m one of those people who view those paying with cash suspiciously! Joking aside, until we can convince people to do away with the cash, we’ll never reach better heights as a cashless society.

      Reply
      • Jackie

        August 30, 2018

        I agree in part Kit, and I’m all for that cashless society, but there are still those problem businesses that will not turn to card payments. It makes me so mad when I get to the checkout to be told that it’s cash only.

        Reply
        • Linda Macy

          August 30, 2018

          That’s true Jackie. A number of businesses now have to start stepping up to the mark if this is to happen and that includes those smaller of companies as well.

          Reply

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