We’re debunking money myths you may have learned as a kid or at home. Many of life’s most important lessons are learned at home, including how to manage money. However, not all financial advice is created equal, and some of the lessons we learned growing up may be holding us back from achieving financial freedom.
In this post, we are debunking money myths you learned as a kid.
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How to Break Generational Cycles 🔄
More Than 1 in 4 Americans Never Talked About Money Management With Their Parents
Money can be a sensitive and complicated topic, which is why many parents avoid discussing it with their children. However, this lack of communication can ultimately do a disservice to both parents and children, making it difficult to establish financial literacy later in life. Here at Pricelesstay we believe that open and honest communication is key to achieving financial independence.
Now let’s break down some of the ‘Money Myths’ you learned as a child that may be effecting your financial well-being as an adult.
Myth #1: Don’t talk about Money
One of the most common financial education mistakes that many of us have probably experienced at one time or another is not talking about money. We’re not just talking about parents complaining about the rising phone bill, but rather in-depth, back-and-forth conversations about long-term planning and financial concepts. Unfortunately, many parents may struggle to have these conversations, especially if they had little financial education of their own. As a result, they may pass on their anxieties about money to their children, perpetuating a cycle of financial illiteracy.
According to a recent survey by the National Financial Educators Council, only 24% of millennials demonstrate basic financial literacy. This lack of financial education can have serious consequences, with many young adults struggling with debt and financial insecurity.
However, the good news is that it’s never too late to start learning about personal finance. By having open and honest conversations about money, families can break down the barriers that prevent financial education and empower the next generation to take control of their finances from an early age.
Myth #2: Credit cards aren’t your friend
Growing up, many of us were taught to fear credit cards and avoid them at all costs. However, this intense aversion towards credit may be a financial mistake that’s holding us back from achieving our financial goals. For example, prioritizing paying off debt before building up any sort of investment or savings strategy may not be the most effective approach to managing your finances.
While it’s true that high-interest debt can be a major burden on your finances, having the backing of a solid savings account can actually help you avoid accumulating even more debt. Additionally, when used responsibly, credit cards can be a powerful tool for building credit and earning rewards. By paying off your balance in full each month and avoiding high-interest debt, you can reap the benefits of credit cards without falling into a debt trap.
According to a recent survey by Bankrate, 31% of Americans don’t have any credit card debt, while 43% carry a balance from month to month. While carrying a balance can be costly in the long run, it’s important to remember that not all debt is created equal. Low-interest debt, such as a mortgage or student loans, may be worth carrying in order to invest in your future.
So, don’t be afraid of credit cards – with the right approach, they can be a valuable tool in your financial toolkit.
Myth #3: Saving is the only way to build wealth
Does this sound familiar? From a young age, we were told if we want to be rich we need to save. While it’s true that saving is an important part of any financial plan, relying solely on savings accounts may not be the most effective way to grow your wealth. In fact, putting all of your money in a savings account may actually be a risky move due to inflation.
With the average interest rate for savings accounts paying only 0.1% and inflation hovering near 8% right now in the US, your money loses future buying power each year. This means that if you’re only relying on savings accounts to build wealth, you may actually be losing money in the long run. Instead, it’s important to consider other investment options that can help your money grow faster than inflation.
Why it matters
Student loan repayments are likely to restart soon, and this could impact millions of Americans who have been on pause for over three years.
Many people, especially Gen Zers, might not have experience with paying their student debt, so it’s important to learn how to budget for this expense.
The article features Taylor Price (that’s ME! 😊), the TikTok finance creator and founder of Priceless Tay, who shares tips on how to adjust your budget to accommodate student loan payments.
By the numbers
The debt ceiling deal will lift the pause on student loan payments, meaning that millions of Americans will resume their monthly payments.
Borrowers may need to spend $200-$400 per month on student loan payments, which can significantly impact their budget.
The big picture
It’s important to track your cash flows and understand your finances, especially when facing new expenses like student loan payments. I recommend using the 50-20-30 method, where 50% of your income goes to needs, 20% goes to wants, and 30% goes to savings. Spending smarter and taking advantage of deals, discounts, and offers can help you save money and get your money’s worth.
Personal finance is personal, so it’s important to evaluate all options and make decisions based on your goals.