You may have been told “carbs are bad for you” or “opposites attract,” but sometimes, these pieces of advice do not hold up in real life. Athletes need carbohydrates for energy, and shared beliefs are important to many couples. Whether outdated, misguided or simply untrue, we have to take advice from others with a grain of salt.
The same is true for your finances. False information spread online or shared between well-meaning friends and family can lead to poor financial decisions. When clients come to us for financial guidance, it’s our job to help them sort the good from the bad so they can manage their money with confidence.
I’m extremely passionate about debunking poor financial advice, which is why I created a myth-busting series on Facebook and LinkedIn. Here are a few of my favorites!
Myth #1: You must monitor your stocks daily.
Wall Street will fluctuate, but generally, it doesn’t need to be checked on a daily basis. This can often lead to knee-jerk reactions to short-term market changes, which is the opposite of the adage “buy low, sell high.” Historically, we know that staying invested through the ups and downs can lead to a greater return over time. You don’t want to let headlines dictate your investment strategy.
Myth #2: Only one person should be in charge of the finances.
It’s very common to have one partner manage the money while the other is in the dark about most financial decisions. However, having both partners involved can help couples avoid potential blind spots, increase accountability in the relationship and create a stronger connection as both partners work toward their shared financial goals. When we work with couples, we make sure both clients are heard and involved in the financial planning process.
Myth #3: You should use credit cards as an emergency fund.
It may be tempting to put medical bills or unexpected car repairs on a credit card, but this is an expensive way to pay for things, especially in today’s high-interest rate environment. It can create a cycle of debt that is hard to escape, because making the minimum payments each month only covers the interest you owe. Instead of living with the anxiety and burden of debt, build an emergency fund with 3-6 months’ worth of living expenses that can be your safety net when life goes sideways.
Myth #4: You need a six-figure salary to build wealth (or save for retirement).
A higher salary does not equal financial security. How much debt you have, your lifestyle, your saving habits and so much more can influence your ability to succeed financially. The most important thing is to build healthy money management habits.
Many young people put off saving for retirement until they move up in their careers and earn more, but delaying saving can hold them back from leveraging compounding interest. The more you save early on, no matter how little or much, the more time your money has to grow.
Myth #5: Financial advisors are only for the wealthy.
Working with an advisor at any stage of life can help you reach your financial goals. Some advisors only specialize in managing retirement assets or getting out of debt, so do your research to find someone who provides what you need. We work with people from all walks of life to create personalized financial roadmaps, designed to help reach your unique goals. Not everyone starts out wealthy, but our goal is to help people build and keep their wealth.