Skip to main content

5 Common Money Myths - Debunked

When it comes to personal finance, it seems like everyone has advice to give—and some tips are better than others. As it turns out, there are many widespread myths and misconceptions about the best ways to manage your hard-earned money.

So, how can you tell fact from fiction? Let's take a closer look at a few common money myths and the truth behind them.

Myth #1: “I don't need a budget."

The truth is, everyone needs a budget! A budget is simply a plan for how and when you want to spend your money. When you follow a budget, you will know exactly where your money is going, which can help you make confident financial decisions. Best of all, budgeting doesn't have to be difficult. Our free online Money Management tool makes it easy to categorize your expenses, keep track of your spending and set saving goals.

Myth #2: “Buying a home is better than renting."

Homeownership is a dream for many people, but that doesn't make renting a bad thing. Depending on your personal and financial situation, renting a home or apartment might be a better choice. Owning a home is a big commitment. If you're thinking about moving or changing careers in the near future, renting can be a more flexible—and affordable—alternative to buying.

Myth #3: “Checking your credit score hurts your credit."

There's a common myth that checking your own credit score will harm your credit. It's true that when you apply for a new loan or credit card, the lender will check your credit with a hard inquiry. This type of inquiry can lower your credit score by a few points. On the other hand, soft inquiries, which happen when you check your own credit, will not impact your score. In fact, it's smart to monitor your credit score regularly. Checking your credit score will give you a snapshot of your current credit health and help you spot errors or fraud in your accounts.

Myth #4: “I can use my credit card as my emergency fund."

No matter how much we plan, life likes to throw us surprises. From car and home repairs to health issues and even job loss, when “life happens," it's important to have cash on hand to help you cover unexpected expenses.

Using a credit card for emergencies can be a short-term solution, but it's not always the best one. If you're unable to pay your credit card balance back all at once, you'll have to pay interest, which can add to an already stressful situation. Instead, experts recommend having a starter emergency fund with at least $1,000 for those “life happens" moments.

Myth #5: “Retirement is so far away. I don't need to think about it yet!"

Even if retirement is decades away, it's a good idea to start saving and planning now. The earlier you put away money for retirement, the less you'll have to save in the future, thanks to the power of compound interest.

Making good financial decisions starts with having the right information. That's why Wright-Patt Credit Union (WPCU) provides a variety of educational tools and resources to help you learn a lot about your finances. Wherever you are in life, WPCU is by your side to help you achieve greater financial flexibility and freedom!