We are all working hard to make the right decisions when it comes to our finances. Sometimes when you think you’re on the right track, misinformation can lead you astray. Here are some money saving myths getting in our financial way.
Money Myth #1: Your money is safest in the bank
Financial expert Johnathan Duong says, “there are a lot of instances of people at risk that people don’t realize, a debit card for example. If someone confiscates your debit card, if you lose it or it’s stolen the money in your bank account is directly at risk, because you have a relatively short period of time to report that otherwise you could completely lose the money.”
Money Myth #2: Cash is king
Duong says, “Absolutely. At the end of the day people don’t value how important it is to keep cash available. Maybe it’s a bit of a distant memory, but if we go back to the 2007 to 2009 economic decline a lot of people found a lot of painful experiences because they didn’t have cash available. So, I would argue to keep a safe amount of money. For some people that’s 3 months, some people that maybe 9 or 12 months of living expenses in cash is critically important.”
Money Myth #3: If you don’t have a will, your spouse will get all your assets
Duong says, “depends on what asset we’re talking about and it depends on what state of residence it is because every state has different rules. Also, it ultimately depends on if you properly designated beneficiaries in the case of a retirement account like an IRA or a 401K.
Money Myth #4: If you’re over a certain age it’s too late to save for retirement
According to Duong, “you have to save more sacrifice more the longer you wait but it’s never too late to save. It’s just a matter of figuring out the amount you do need to put away, and how you need to properly invest that. It’s true though, the earlier you start the easier it is.”
Money Myth #5: All adults need life insurance
Duong says, “if you have people who depend on your income whether for day to day expenses to pay for college or let’s say you have a stay at home spouse who if they passed away you might need to pay for daycare and other things of that nature; then those are the people who need life insurance. But, if the only one dependent on your income is yourself then probably the only life insurance you need is to make sure you have your final expenses taken care of for a funeral or something of that nature. So, I would say it’s not the case that everyone needs it, but in my experience those who need it don’t have it.”
Remember, experts say to always ask questions to make the best financial decision for you and your money.