The more you know about money, the easier it is to manage it and improve your financial picture. But most of us are so busy with our lives that we haven’t spent much time learning about things like improving credit and how to budget to ensure that we’re really saving money.
Now is actually the perfect time to learn more. April is Financial Literacy Month, so we’ve gathered some information for you here about the most common myths and misconceptions about money.
To build the brightest possible financial future, it’s important to manage your debt well. As people learn more about improving credit, there are some myths and misconceptions that they come across.
A big one is this: Many people assume that all debt is the same.
That’s not actually true. As you look to improve your credit, it’s important to know the difference between ballooning credit card debt and other kinds of borrowing, like fixed-rate personal loans and fixed-rate mortgages.
A mortgage on a house is a form of debt. But as a homeowner makes steady mortgage payments on time, they’re building a history of using credit responsibly. The same goes for making monthly payments on a fixed-rate personal loan.
If you’re carrying a balance on a high-interest credit card, the amount you owe each month will vary – in fact, it can vary by quite a lot. An unexpectedly high monthly bill can cause some folks to make even minimum payments late, which means they’re hit with fees and interest charges that can make their balance grow.
But people who convert high-interest credit card debt into a fixed-rate personal loan will have the same payment due each month. That can help them stay on track. Over time, they’re paying down their debt while also building a solid credit history.
At 1st Franklin Financial, we’re always glad to help customers figure out the best way to manage their debt, so they can pay it down instead of wrestling with it – or worse yet, growing it – month after month.
Here’s another money misconception: Some people think that looking at your credit report will lower your credit score. It doesn’t. You can check your own credit report as often as every week at no cost.
There are also some common misconceptions about saving money.
If you’re trying to set a few dollars aside each month as savings, you may think you have to make this choice again and again each month. Actually, it’s possible to send a few dollars from your paycheck directly into a savings or investment account each month. That way, you’re saving money automatically before you even see it, eliminating the need to choose to save that money after every payday.
Want to learn more about saving and investing? The Friendly Franklin Folks can help you begin saving with an initial investment of as little as $25.
What about learning how to budget? Tracking all of your spending – even the small stuff – can be eye-opening. Small purchases like an overpriced cup of coffee on the way to work can add up. But it’s especially important to look at the bigger expenses, like a large car loan payment, that may be eating up a lot of your income.
When it comes to car loans, here’s another money misconception: You might assume that if you need a car loan, you should get that loan through the dealer who is selling you the car.
The truth is, you don’t have to get your car financing from the person who is selling you the car. Actually, you might save money by looking elsewhere for your car loan.
Asking questions and learning more is so important when it comes to managing money. Any time you’re wondering about something, the Friendly Franklin Folks are here to answer every question you might have and go through all the details with you. There’s nothing we love more than helping our neighbors build bright financial futures.
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