While most people realize breaking a mirror won’t bring seven years of bad luck, many money myths are still widely believed. Can you tell whether the following are fact or fiction?
Let’s put your financial know-how to the test.
1. A mortgage is good debt, no matter how big it is.
FICTION: “Good debt” is manageable and can help you achieve important life goals. While home ownership can be a great goal, not all mortgages are “good debt.” If your house payments are breaking the bank, or if your adjustable-rate mortgage (ARM) is about to reset to a payment you can no longer afford, even the mortgage on your dream home may not qualify as good debt.
2. Financial planning is only for the wealthy.
FICTION: You may think there’s no point in working with a financial professional if you don’t have a fortune in the bank, but most people can benefit from a little expert help. Even those with modest assets may have a lot to gain from advice about taxes, investments, budgeting, debt and credit. And this valuable service may also be easier to obtain than you think. Workers with an employer-sponsored retirement plan may already have access to a financial professional through their benefits package — check with your human resources department to learn more.
3. If I’m still young, there’s no rush to save for retirement.
FICTION: It’s actually never too early to start saving for retirement, but waiting too long could put some serious cracks in your future nest egg. If someone invests $30,000 into a retirement fund at 25, even with no further contributions, they could have nearly $450,000 by age 65, assuming an average annual rate of return of 7%. But if they were to wait until 45 to start saving, that amount drops to around $116,000.
4. There’s no sure thing when it comes to investing.
FICTION: There actually is a sure thing — and that’s your employer 401(k) match. This is an additional deposit from your employer into your 401(k) equal to a percentage of your contribution up to a certain limit. Your matching funds may not “vest” right away, which means they might not fully belong to you when they’re deposited. But while you may have to wait for your matching funds to vest, your employer match is like free money — and one of the few sure things in the world of investing.
5. It’s better to pay down all your debt than invest your money.
IT DEPENDS: Whether it’s best to pay down debt or invest first depends on your individual situation. It’s often advantageous to pay off higher interest debts like credit cards quickly — especially with the average credit card rate topping more than 19% in the final months of 2022. But for a low-interest mortgage or other manageable debt, it might make sense for investing to take priority — or do a little of both at the same time. This is an area where getting advice from a qualified financial professional can really help.
Everyone can improve their financial wellness.
WellCents can help boost your financial wellness. The first step is to take a short online financial assessment. Your individual results are completely confidential and can help you better understand your financial strengths and weaknesses. You’ll gain valuable insights into your retirement readiness, debt, credit, investments and more. And you’ll have access to e-learning and articles tailored to your needs, plus advice from a financial professional. No matter your current situation, it’s never too late to start improving your personal finances — and that’s a FACT!