Making financial decisions is very important whether the market is doing well or dropping doesn’t really matter, you still have to decide on your day to day expenses, investing, saving, and borrowing and so on. There are some wonderful tools or self-proclaimed financial-gurus in the market that promise to manage the finances for you. For some it does work and for some these are too confusing. So here are some myths that have been cut short for you and made simpler to understand and manage and make sound financial decisions.
- I am too young to start saving.
Money management is for everyone, it’s more about managing your individual situation that’s best for now and for your future. There are plenty of myths that are akin to this “I am too young to start saving ” or “The amount of money I earn is too small to save” But the truth is saving is one of the pillars on which financial security is built for your present and future retirement life. So “The magic of compound interest means the earlier you start saving the earlier one can retire and in turn make money work for you.
When we talk about saving we should also talk about investments, which is the other pillar for a good retirement life. One needs to start investing as early as possible. If the amount you earn may not be enough for an investment you can take a personal loan which is solely dependent on your requirement and credit history. Again take the loan when you are young and invest accordingly to fetch some fruit for retirement.
- Making Minimum Payment is sufficient
Making the minimum monthly payment will only extend the time for you to get out of debt, and increase the amount of interest you eventually must pay. If you think you can run the show by paying off more than the usual monthly payments then one need to increase the minimum monthly payments as much possible, which will reduce the time required for you to get out of debt. So plan and manage your finance accordingly and consider minimum monthly payments as a trap.
- It’s Always Better to Pay off High Interest Debt First
It is a smart idea to pay off your higher interest loans to get you out of debt faster. But for every individual circumstance, financial goals and temperaments are unique. So trying to tackle a high-interest debt with a huge balance can be an overload or a huge task for some. So for them it’s good to pay off your smaller balances first and then attack your larger balances.
- The Amount of the Monthly Payment Is All That Matters
The decision to take a loan for anything is serious even though the purpose for going into debt is worthy. For example, few of them can afford to pay cash to buy a home. But there are plenty of others who need to take a personal loan or home loan to make their dream come true, so in that case there are plenty of things that need to be considered other than just the monthly payment. You will need to consider factors such as the interest rate and how the length of the loan, rates are calculated or the loan term, the benefits of early payments is better or the added cost of late payments.
- You Get What You Pay For
Sometimes a high price tag means prestige. Sometimes a high price tag means quality. Sometimes a high price tag just means you have overpaid for an item. Just because you have paid a lot for something doesn’t necessarily mean it would be of a superior quality or will make your life easier, which can be especially true when it comes to credit cards and consumer loans, where comparison shopping can save a lot of annual fees, grace periods and interest rates. Everything has a price tag, if you are getting something for cheaper; it is your responsibility to check if it really worth for the price you are paying. Just because the pricing of something is few 100s or 1000s lesser does not necessarily mean you should compromise on the quality.
While managing money it is essential to keep the above mentioned points in mind and plan to invest your savings in an appropriate and most profitable manner. There is no right age to start saving, you can start the saving habits even with your pocket money.