With the overabundance of financial information available on the Internet, it can difficult to weed out the less than accurate information. Some information available is not only false, but can increase your financial stress. People come from many different financial situations, and generic advice is not necessarily true for everyone. Here are some examples of advice regarding money that isn’t completely factual.
Cut Up All Your Credit Cards
This is an extreme measure, and should only be reserved for the most undisciplined. However, keeping at least one credit card, for emergency purposes, can be beneficial. Also, try not to resort to canceling credit cards, because this can actually damage your credit score. The more available credit that you have, the more positively it impacts your score. If you cancel a card, your available credit automatically decreases.
Pay Yourself First
If you are struggling financially, putting money into savings before you have paid bills can cause late fees and interest charges that you don’t want. Eliminating debt should be the first priority. This will save you money each month, and is definitely beneficial in the long term. The more that you are able to pay on a credit card or utility bill, the sooner it will get paid off, and the more you can put into your savings.
401(k)s Are A Fool Proof Investment
Although retirement investment accounts are promoted as safe investments, no investment is completely safe. There are risks to any investment, and retirement accounts are no exception. Most people consider this to be a generally safer than other options, but all investors should be aware of the risks of their investments. A 401(k) can be a great way to increase your retirement income, especially when your employers contributes to this fund. However, it is best to know all of the risks before choosing a retirement plan.
Credit Is A Necessary Part Of Life
Believe it or not, there are people that live completely without credit, and within their means. When they wish to make a big purchase, they put away money into a savings account that acquires interest and wait until they have enough money to buy it. This is also true for large purchases such as vehicles and homes. It is much cheaper to save up for a house or a car and pay with cash. It will save you thousands in the long run. People are trained to believe that they need to purchase a new car or home as soon as their credit score is high enough for them to do so. This is how you acquire unnecessary debt.
There are many so-called golden rules of finance that prove to be not true. The best way to decide what is good advice and what is not is to rationalize all of the advice you receive and research the information thoroughly before making a permanent decision.