Tuesday, May 16, 2017

5 Damaging Money Management Myths

We live in a world where information travels rapidly. Social media has made it remarkably easy for people to share content with their friends, families, and coworkers, and distant circles - if a headline catches your eye, you may find yourself clicking "share" or "retweet" without a second thought. 

Unfortunately, many people often neglect to investigate the validity of the information before they share it. As a result, misinformation spreads across social media (and the rest of the internet) like wildfire. Some articles, though inaccurate, are relatively harmless. Others may carry damaging misinformation that can negatively impact its readers.

Financial misinformation is a prime example. A person's financial health and literacy greatly influences his ability to lead a successful, financially solvent life. If he is constantly fed misinformation about the best way to handle his money, he may struggle to get on top of his financial situation.

Our local bank at the Lake of the Ozarks is here to help protect people like you from the rampant money myths that plague our culture. Keep reading to learn the truth behind some of the common personal finance myths you may have heard.

Myth #1:
You Can Save For Retirement "Later"
If you're in your twenties or thirties, retirement is probably the furthest thing from your mind. You have other financial priorities, such as buying your first home, getting married, paying off student loans, buying a car, or supporting your young family. Since retirement is decades away, it may seem only natural to wait a few years before you actively begin saving for it. The longer you wait, however, the more you limit your overall investing potential. In order to maximize the true benefits of compound interest, it's best to start saving for retirement as soon as you earn your first paycheck.

Myth #2:
You Should Invest In Gold Or Other Precious Metals
Gold has traditionally been one of the most popular options for people looking for safe ways to invest their wealth. While owning some gold may not be a bad option, it is better to diversify your investments. CDs, high-paying savings accounts, bonds, and/or stocks work together to create a diversified portfolio that will better guard you against risks. If you put all your eggs into one basket, your savings may be totally wiped out if that one basket "tips over."

Myth #3:
Credit Cards Should Be Avoided At All Costs
Thanks to the steady increase of credit card debt in our nation over recent years, credit cards have earned a bad reputation. Many people believe that the only smart way to handle credit cards is to chop them in half. If used wisely, however, credit cards can be a great financial tool. Keeping your balance low and paying it in full every month can contribute to a strong credit rating. It may also allow you to reap the rewards various credit card companies offer, such as airline miles or cash back.

Myth #4: 
Buying A Home Is Smarter Than Renting
This myth is almost as common as its counterpart: "renting a home is smarter than buying." People tend to have firm beliefs from each perspective. The truth is, however, that renting vs buying should be evaluated on a case-by-case basis. If you anticipate moving to different cities frequently (every 1-3 years), renting is likely the better option for you. If you plan to stay in the same area for a minimum of three years, on the other hand, buying a house will likely make more sense financially. After about three years, the increased upfront costs of buying a house will likely outweigh the steep monthly costs of renting, making homeownership the more affordable option in most cases.

Myth #5:
Only Wealthy People Need To Worry About Financial Planning
It's true that if you are wealthy, financial planning will likely be more of a priority for you. However, it is just as important (and possibly more important) for people with limited funds to take active financial planning steps as well. When you have limited income, every penny counts. By budgeting your money wisely, you can still accomplish your financial goals (both long-term and immediate) even with a smaller paycheck.

Help Spread The Word
We would love your assistance in our efforts to debunk these common myths about money management. Please share this article with those you think could benefit from the information.

Consider Us Your Local Financial Resource!
First Bank of the Lake is proud to be your local banking resource at the Lake of the Ozarks. We offer a variety of financial services designed to help you enhance your financial situation, including CDs, IRAs, and high-paying savings accounts. For more information, visit our website: www.FirstBankLake.com

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First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway

Suite 100
Osage Beach, MO 65065

(573) 348-2265

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