Debunking The Top Six Myths Around Personal Finance
Imagine yourself being on an island where there’s no other human except you. You don’t have to deal with money, you don’t have to monetize your time, and you don’t have to care about market trends for financial planning. That’s probably how the ideal stress-free world would look like, but it sounds too good to be true, right?
Money is omnipresent in the present day and has been the same for all ages. It’s hard to contemplate a world that doesn’t run on the wheels of finance. Many individuals who realise the importance of robust financial planning often turn to different resources to help themselves out with managing finances. However, not everyone is aware of the importance of financial planning and does it rightly.
In this write-up, we’ll explore the common myths around personal finance and debunk them so you can make financial decisions that are in your best interest.
Myth 1: Personal finance is all about investing.
Truth: Personal finance is a broad realm that encompasses not only investments but savings, liability management, retirement planning, wealth management, estate planning, and much more.
Myth 2: Financial planning is only for financial geeks.
Truth: Financial planning is an important financial exercise for people of all ages and backgrounds since everyone relies on finances to support their goals and aspirations. The sooner a person is exposed to the process of financial planning, the more they’re equipped to combat financial downturns. Nowadays, everyone can gain exposure to the process of financial planning through apps like 1 Finance, which offers consultations with ‘Qualified Financial Advisors’ and resources like personal finance magazines that can help you become a better financial planner.
Myth 3: Taking insurance means exchanging funds for no returns.
Truth: Insurance is a vital aspect of financial planning. Insurance is going to act as a safety net in times when you have to face financial adversities that an emergency fund can’t cover. Different insurance plans can be used to cover different expenses, such as substantial medical expenses, damage to your vehicle, or anything else for which an insurance plan exists.
Myth 4: It’s too soon to plan for retirement in your early 20s.
Truth: Financial advisors can’t stress enough how essential it is to start planning for retirement early in life. As soon as you start making an income, you should start allocating funds for retirement. These small funds can compound into a huge corpus by the time you retire. Early retirement planning ensures that retirement is devoid of stress and is financially secure.
Myth 5: Any form of credit is bad for your financial health.
Truth: Not all credit puts you in bad debt unless it’s taken without caution. Taking a loan can sometimes bring you tax exemptions, which can be beneficial to your financial health. Therefore, if planned strategically, getting things on credit can ultimately be good for you.
Myth 6: You need to be rich to consult a personal finance advisor.
Truth: With growing awareness of financial planning, more people have reacted positively to the need for financial planners. The result? Consultations with a financial advisor may not be as expensive as you may think. Whenever you’re in doubt about your financial plans, you must consult a financial planner to help you navigate through the challenge.
Financial experts are the right people who can assist you in personal finance, as they thoroughly assess all the financial aspects relevant to you and your goals. Personal finance is more than just investing. If done correctly, it can benefit you in the future by making you resilient to financial challenges.