Money for Life work in partnership with the Money Advice Service, an independent organisation set up by government. Money AdviceService provides free, unbiased money guidance across the UK to help people make the most of their money. If you have a question or need help, you can chat to them here.
Let’s face it, managing money can be complicated. It’s no wonder we end up looking for quick, simple solutions to make our lives easier. But with so much conflicting information out there online, it’s hard to tell which financial advice is right to follow.
Well enough of #FakeNews, it’s time we clear up some the biggest money myths once and for all…
If there’s one rule to remember when it comes to debt, leaving any amount unpaid is NEVER good for your credit rating. Think about it this way, would you trust lending someone money if you knew they wouldn’t pay it back on the agreed date? It works the same way with a bank – only this time you would be charged interest the longer it’s left. Paying off debts helps to build a trusting relationship and therefore a better credit score. So keep in mind that the sooner you pay off your balance, the better! You can learn more about what a credit score means to you here.
Understandably, this is a common saying. There’s no denying that setting goals can help motivate you to save as it keeps us focused. But the truth is, whether you have a goal in mind or not, saving in general is one of the best habits you can adopt. While we are young and taking on new responsibilities, life can take unexpected turns. Your car could break down, or might be hit with an unexpected rent bill. For these reasons it is always good to have an emergency fund readily available at any given moment, especially if you’re not a fan of eating beans on toast for the rest of the year. Check out our savings guide if want to learn more.
Paying in cash is always better than credit right? After all, if you go on a night out with £30 pounds in your pocket then at least there’s no temptation to overspend at the bar and wake up in the morning with a massive debt looming over your head. On the flip side, it can also be very risky. Let’s say for instance you lose your money or it gets stolen, unfortunately you’ll be kicking yourself as you can’t get it back. A credit card on the other hand can offer a safety net through its insurance plan. You can also get some amazing perks from credit card companies, such as holiday reward points and cash back on your shopping each month. The trick with a credit card is to stay disciplined – as long as you spend within your means and pay off your balance every month, you will have nothing to worry about!
30 years ago maybe. But times have changed…a lot. Not only have house prices soared in the UK, but with the fluctuating market, the value of your home could become very unstable. In other words, what you spend 300k on this year could decrease to 250k next year – which raises the question whether renting is best? It all depends on whether you plan to live in your home forever. As a young person, you’re probably not sure at this point, which means renting is ideal as it provides the flexibility for you to move around.
Ok this one we can really relate to. In your 20’s, you’re hardly going to feel like retirement is round the corner. And when you’re working long hours, the last thing you want is to see is your hard earned money going elsewhere. But it’s never too early to plan for retirement. Put it this way, the later you start saving, the longer you will need to work to have enough money to live on. In fact, studies show if you waited till the age of 45 to save, you would probably have to work past your 70s just to make up the difference…Eeesh! Here’s our guide on how to get started.
So there we have it, now that we’ve cleared through all the mess, smoke and mirrors – you should be ready to step back out into the world full of financial confidence! Remember for more tips and advice, you can follow @MoneyForLife on Twitter, Instagram and Facebook.
Money for Life work in partnership with the Money Advice Service, an independent organisation set up by government. Money AdviceService provides free, unbiased money guidance across the UK to help people make the most of their money. If you have a question or need help, you can chat to them here.
