January 11, 2024

Stay Money Smart: Debunking 5 Myths About Personal Finance

Estimated reading time: 3 minutes

The New Year often brings resolutions and goal setting for the rest of your year. The first step to achieving your financial goals is education. If financial success is on your resolution list, be sure you aren’t falling for these common myths!

Myth: I Don’t Have Enough Money to Save

Truth: Any amount you can set aside is important, especially if you’re consistent. Saving is a habit, so the sooner you make it a priority, the easier it will feel! Experts recommend keeping an emergency fund with at least three to six months of living expenses to protect your ability to pay bills.

Additionally, when it’s time for your mortgage application, your lender will require you to have a set amount of money aside to ensure you have the means to make your mortgage payments on time.

Myth: I Only Have to Check One Credit Score, Once a Year

Truth: There are three major credit bureaus: TransUnion, Equifax, and Experian. Each bureau has its own scoring model and evaluation patterns, which may result in slightly different scores for an individual. That’s why it’s important to check all three scores and reports at least once a year for accuracy.

Myth: It’s Too Early (Or Too Late) to Save for Retirement

Truth: It’s never too early or too late to start saving for your future! Regardless of your age, there will be a time in your life when you reduce or stop the number of hours you work. Retirement accounts have accruing interest, allowing you to put away more money over time. Some workplaces offer to match all or a part of the contributions that you make to your 401(k), allowing the funds you save to accrue faster and providing you with further peace of mind.

Myth: Buying With Debit and Cash is Better Than Using Credit

Truth: Credit cards are great financial tools when used correctly. When you make a purchase with your credit card, remember to pay it back in full and on time! Consistently making payments reflects positively on your credit history and report. When it’s time to apply for home financing or a car loan, your credit score is one of the factors used to determine your interest rate and affordability.

Credit cards can also be beneficial because of their reward programs. As you use your card and make purchases, you may qualify for incentives like cash back or travel discounts.

Myth: All Debt is Bad Debt

Truth: Certain types of debt can help you achieve your financial goals. For some, the ability to take out a loan can make the impossible possible. Auto loans, student loans, or mortgages are all great examples of debt that can help propel you forward instead of holding you back. Consistently paying back your debt is also an efficient way to boost your credit score.

Taking out a mortgage makes home financing affordable. To find out more about our diverse loan programs, contact us today! You’ll be put in touch with an experienced Loan Originator who will be there for you during every step of the process.

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Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.