Most of us have picked up ideas about how we save and spend money that is just wrong. If you recognize yourself as following these myths, don’t feel too bad. Research shows that many Americans have the same mistaken notions about credit and other money matters that can hurt our financial situation at any stage of our lives.
Some myths can create financial holes for our families at critical times in our families’ lives. Clearing away those myths can have a big impact on our finances, too.
A credit card with a realistic credit limit and interest rate that fits your needs is a powerful tool in terms of convenience and in building a credit history. But you don’t want to use it to pay for purchases over time and carry a balance. Not only does it not do anything to improve your credit profile, but it also makes every purchase more expensive when you add on the card interest.
Instead, use a card with a credit limit you are comfortable with to pay specific bills during the month (think cell phone or streaming service bill). You can set those up as recurring payments from your card to make sure you pay those bills on time every month. Don’t buy things with that card that you can’t afford right now.
Then, make sure you pay off the whole credit card balance each month. Making that payment automatic also makes sense since you’ll know in advance what will go on the card, and you won’t be paying the often sky-high interest rate on your purchases.
The steady history of on-time payments is the best way to earn a good credit score – and keep it high over time. Carrying a balance gives more of your money to a giant company.
Many people are under the impression that any request for your credit report will damage your credit score, even if it’s you checking it yourself.
In reality, checking our credit reports regularly is something all of us need to make a habit. If you aren’t keeping track, you could miss inaccurate data that can make its way into reports due to various factors. And if you don’t know what your report says, you aren’t likely to take steps to improve your overall credit profile.
More to the point, unlike an inquiry made by a third party when you apply for new credit, your request for your own credit report is considered a “soft inquiry” that is not given any weight by the credit scoring algorithms.
Many banks and card companies offer a free credit monitoring service, which is a good way to keep an eye on things in between getting a complete credit report.
Also, when you use one of the free credit report sites, double-check to see if they include your score and which credit score(s) they’ll share with you.
As you prepare to send your young scholars off to college, make sure you don’t miss a chance at financial help by writing off scholarships. Contrary to what many parents and kids believe, scholarships are not all needs-based or require your youngster to be at the very top of their class. And there are many easy scholarships to apply for.
The reality is that there are many thousands of scholarships available based on all sorts of criteria, many of which don’t involve a student’s financial situation or are aimed only at the Valedictorian or star athlete. Family background, special interests, unique interests and skills, even just where you live are all criteria for many scholarships you might never have thought of applying for.
But they do all have something in common – don’t wait till the end of senior year to get started looking for the scholarships you have a chance at, and be really careful that all your applications comply with every single instruction. It is one more pre-college chore but well worth starting early and spending a good amount of time on it.
We’ve all seen the movies where greedy and unpleasant people sit around the lawyer’s conference table to find out who got the mansion and who takes the Picasso painting. It can make it seem like wills are only important if you have a ton of money and other assets that need to be split up after you are gone.
The reality is, almost everyone should take the time to put together a will and should do it long before they think it will be needed. That’s because we will make things a little simpler for most of us for the folks we leave behind. It’s a way to make sure special items go to the person you’d want to have them and how you can continue taking care of people, pets, or causes important to you.
By making a plan and getting a will drawn up and properly witnessed, you’ll make sure that you, not your kids or other relatives, make those tough decisions. That helps them handle things with a minimum of hassle at a difficult time. Otherwise, a judge will likely end up in charge, dragging the process out and giving the family one more thing to struggle with after you are gone.
We all work hard to take the best care of our families that we can. Eliminating these common misconceptions around credit cards, college financing, and what happens to our assets when we are gone can help us firm up our day-to-day finances, plan, and find peace of mind for ourselves and our families.