min read
· Posted on
February 21, 2024

4 finance myths we’re SO sick of hearing

Bringing in the mythbusters because we've been believing these finance lies for way too long.

What's the key learning?

  • Buying isn't always better than renting
  • You don't need to be loaded to start investing
  • Credit cards don't always increase your credit score
  • Budgeting isn't supposed to be restrictive

On the outside, finance looks like an absolute beast that’s harder to understand than the plot of Inception. 

There’s different strategies that different people ‘swear by’ and it can be confusing AF to know the difference between information and opinion.

So we’re here to set the record straight on some of the more outrageous finance myths we’re all SICK of hearing. 

  1. Buying is ALWAYS better than renting

Renters out there, you’ve probably heard people say “rent money is dead money”. Especially in Australia, where there can be a lot of pressure to buy a house.

And yes, buying a house can be a great investment but it’s also a massive commitment both financially and personally that not all of us are willing to make.

Depending on your financial goals and lifestyle goals, renting could be a solid option, and it doesn’t necessarily stop you from saving or putting money towards other long-term investments.

For many young people, renting can be a way to afford living in desirable/convenient suburbs, learn to be independent, live with friends/partners, and build lifelong memories.

It also provides flexibility in case you want to have options open to move suburbs, cities or countries.

  1. I need to be rich to invest

No, no no. There was a time when investing and information about investing wasn’t really accessible, except for the rich. 

You needed a decent minimum deposit to be able to invest in the share market.

Today, investing looks very different and absolutely anyone can get into it. There are apps that let you start investing with just $1 and help you accumulate your spare change and invest it to build a return.

You might think, what’s the point of investing $1, it won’t build my wealth? 

It might not be a life-changing investment, but consistent small investments can help reduce the burden of some expenses. 

  1. Credit cards will increase my credit score

This is a prickly one.

Simply getting a credit card won’t improve your credit score and actually could hurt your score instead - especially if you’ve taken out a lot of credit or applied for too many credit cards in a short period of time.

Using a credit card CAN help improve your credit score IF you’re able to show yourself as a responsible credit card user.

But it requires making timely repayments, and being careful when you apply for new credit cards, as rejected applications can also harm your credit score.

  1. Budgeting is too restrictive for me…no thanks

Okay yes, we won’t lie to you, budgeting does take a bit of work and organisation, and that’s not everyone's idea of fun. 

But the idea of budgeting should be the OPPOSITE of making your life strained and restrictive. 

Budgeting is about allocating money for the things you need and want to spend on so you can live the life you want to live without the guilt of having overspent.

A good place to start is by splitting your income into three buckets; needs, wants and savings, 

  • 50% of your income comes to your needs, 
  • 30% to your wants 
  • 20% into savings.

That way, whatever money is in your needs and wants categories, you can spend without giving it a second thought or shedding a drop of guilt.

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