Five Common Financial Myths Debunked
Myth 1: Renting is Just Throwing Money Away
The Reality: Renting can be a smart choice. It offers flexibility, which is perfect if you’re not ready to settle down or if your job requires you to move around.1,2 Plus, you don’t have to worry about maintenance costs or property taxes – that’s all on the landlord.2
Myth 2: You Need a Hefty Sum to Start Investing
The Reality: You can start investing with just a little bit of money. Thanks to modern investment platforms, you can begin with amounts as small as £1 and gradually build your investment over time.3,4 It’s all about making regular contributions and letting compound interest work its magic.5
Myth 3: Carrying a Balance on Your Credit Card Boosts Your Credit Score
The Reality: This is a common misconception. Carrying a balance doesn’t improve your credit score; paying off your balance in full each month does.6 It shows lenders that you’re a responsible borrower and keeps your credit utilisation rate low.7
Myth 4: Saving Money is Always the Priority
The Reality: While saving is crucial, it’s not the be-all and end-all. You should also consider investing to potentially grow your wealth and keep up with inflation3. It’s about finding the right balance between saving and investing for your future.
Myth 5: Financial Planning is Only for the Wealthy
The Reality: Financial planning is for everyone, regardless of how much money you have.8,9 It helps you manage your finances efficiently and ensures that you’re prepared for both the expected and unexpected events in life.10
Remember, it’s important to question the financial “wisdom” you hear and consider whether it truly applies to your situation. Consult with a financial adviser to tailor a plan that suits your unique financial goals and circumstances. Happy myth-busting!
1 ‘The Advantages of Renting’, (Rightmove, Advantages of Renting, published 23 December 2022)
<https://www.rightmove.co.uk/guides/renter/preparing-to-rent/advantages-of-renting> accessed 16 April 2024.
2 ‘Your six pros and cons of renting a home’, (BBCNews, Pros and Cons of Renting a Home, published 10 May 2018)
<https://www.bbc.co.uk/news/business-43894875> accessed 16 April 2024.
3 ‘Georgie Frost, ‘Six ways to invest with little money’, (TheTimes, Investing basics, published 24 November 2020, updated 07 March 2024)
<https://www.thetimes.co.uk/money-mentor/investing/investing-basics/invest-little-money> accessed 16 April 2024.
4 ‘Gavin Shepherd and Sam Dunn, ‘Investing for beginners’, (Money Saving Expert, Investing in stocks for beginners: How to get started, published 04 October 2018, updated 28 March 2024) <https://www.moneysavingexpert.com/savings/investment-beginners> accessed 16 April 2024.
5 ‘Ill Fenton and Tobi Opeyemi Amure, ‘How to Invest With Little Money in the UK’, (Sterlingsavvy, How to invest with little money, published 30 August 2023, updated 16 January 2024)
<https://sterlingsavvy.co.uk/investing/how-to-invest-with-little-money-uk> Accessed 16 April 2024.
6 ‘Cristy Beiber, ‘Do You Have to Carry a Balance to Earn a Good Credit Score?’, (Fool.com, Do you have to carry a balance to earn a good credit score?, published 7 December 2023)
<https://www.fool.com/the-ascent/credit-cards/articles/do-you-have-to-carry-a-balance-to-earn-a-good-credit-score/> accessed 16 April 2024.
7 ‘Carrying a credit card balance’, (Aquacard, Published 02 September 2022, updated 25 September 2023)
<https://www.aquacard.co.uk/building-better-credit/carrying-a-credit-card-balance> accessed 16 April 2024.
8 ‘Nick Colman, ‘The importance of financial planning’, (HL.com, published 14 November 2022)
<https://www.hl.co.uk/financial-advice/insights/the-importance-of-financial-planning> accessed 16 April 2024.
9 ‘Jessica Mcgowan CFP, ‘The importance of financial planning’, (Riverfall financial, The importance of financial planning, published 16 April 2024)
<https://www.riverfall-financial.co.uk/our-blog/the-importance-of-financial-planning> accessed 16 April 2024
10 ‘Jannike Ohsten, ‘The Importance of Financial Planning’, (MHR Global, The importance of financial planning, published 13 March 2024)
<https://mhrglobal.com/uk/en/knowledge-hub/finance/importance-financial-planning> accessed 16 April 2024.
Five Common Financial Myths Debunked
Navigating the world of finance can be like trying to find your way through a maze. There’s a lot of “common knowledge” out there that might actually lead you down a dead end. So, let’s set the record straight on some of these financial myths.