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The management of personal finances is something that most of us learn in bit parts. Unless our parents took it upon themselves to explain the ins and outs of financial management, managing this side of our lives is a constant learning curve.

As a result of this, financial knowledge across the general populace is… well, less than ideal. People learn what they have to learn to get by, but ignore the ins and outs that can make a real difference to your financial situation. In this atmosphere, it’s inevitable that certain myths have the ability to rise to the surface. These personal finance myths, that hundreds of thousands of people believe to be true, can be incredibly problematic when it comes to financial management.

So, it’s time to bust the myths to help ensure that your financial management is always as good as it can possibly be. Here are four of the most common myths, as well as an explanation on why these “common knowledge” sentiments should actually be ignored…

MYTH: People with excellent credit scores don’t have credit cards or debt

REALITY: You need to have credit cards, loans, and even debts for a good credit score.

The reason for this is simple: your credit score is a reflection of how good a customer you have been in the past. Creditors use this to judge how good a customer you will be in the future. If you don’t have a financial history — such as a credit card or debt — then they can’t judge if you’re a good customer or not, because there’s no track record on which you can be judged. Using a credit card sensibly is the best way to maintain good credit; read through credit cards reviews to find a card that works for you, use it for basic purchases, and pay it off in full every month, and your credit score will blossom.

MYTH: Debt is always bad

REALITY: Debt can be bad, but it can also allow you to further your life in a way that would otherwise have not been available to you. Debt can be beneficial if the debt was incurred for a specific purpose, such as a car to allow you to seek work with a longer commute, or funding your education. If debt is productive and manageable, then it isn’t inherently bad.

MYTH: Pay off highest interest debts first

REALITY: Paying off the highest interest debts may be beneficial in a financial sense, but research has indicated that such a strategy isn’t as useful in a psychological sense. Instead, you should pay off the smallest debts first, as this helps you to feel like you’re making more progress with your debts, and this helps you to focus.

MYTH: Budgets aren’t necessary if you’re financially secure

REALITY: Budgets are necessary for everyone, and can ensure that those who are financially secure stay that way. Learning to budget is one of the most useful personal finance skills you can learn.

In conclusion

Now that you know the truth behind these common myths, the management of your own personal finances should be a breeze!

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Most of the time, when you read articles and blog posts about saving money, you’re bombarded with lots of advice that require you to vastly change your lifestyle if you want to have more money in the bank. You’ll be told to stop buying your veggies at the store and grow them at home instead or to cut the cable and start reading more books instead of watching the TV; some people will even advise that you cut your own hair! Although there is nothing wrong with these tips, and they will undoubtedly save you money, they aren’t what you want to hear because they are asking you to change your lifestyle too drastically.

The good news is, you can save money without changing your lifestyle very much at all. Here are some pretty painless ideas that will help you to save more money every month while pretty much maintaining the kid of lifestyle you have now:

Turn Down the Temperature

If you turn down your thermostat temperature down by just three degrees, unless you experience a sudden arctic blast, you are unlikely to notice the difference in your home’s coziness levels, but you will definitely save at least 10 percent on your energy bills, which depending on how much you pay each month, could represent a significant saving!

Switch Power Suppliers

As long as the lights come on and you can heat your home, you don’t really care where the energy come from right? It won’t make any difference to how you live your life, will it? So, start looking around for the best electricity and gas prices available to you and make the switch. There is no reason to be loyal to the power company when you could save tens of dollars every month by switching, so do it now.

Determine the Best Time to Do the Laundry

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Many power companies run peak and off-peak hours and if your run your power-guzzling appliances like the washer and dryer during off-peak hours, you can save lots of money. This is a really easy lifestyle change to make because the laundry needs to be done no matter what and switching it to a later hour is unlikely to affect your lifestyle very much at all.

Turn Stuff Off

Before you leave the house, or when you aren’t using it, turn everything from the TV to the lights off. Leaving stuff on when you aren’t using it, and certainly when you aren’t even in the house is madness from a money-saving perspective, and it isn’t exactly good for the planet either!

If you’re concerned about maintaining the illusion that someone is home to deter burglars, then install a few energy efficient LED lamps in your home and connect them with a timer-based power strip, so the lights will come on for a little while when it gets dark.

Start Planning Your Meals

One of the most common ways we waste our cash as a nation is by shopping without a grocery list, particularly if we do so when we’re hungry. Why? Because when we don’t have a list we tend to buy all kinds of random things that may or may not feed us for a whole week in way that makes sense, and when we’re hungry, we tend to throw a lot more junk into the cart. By working out, then, what we plan to eat for a whole week and creating a list that contains only the ingredients to make those meals, we can save money. We’ll probably save a few pounds from being added to our bodies too!

Check the Unit Prices

While we’re on the subject of grocery shopping, don’t be fooled into thinking that the item with the lowest sticker price is the one that represents the best value – often it is not. You see, when you’re comparing like items, you need to compare the unit price, not the sticker price to see which represents true value for money. You’d be surprised how much you can save simply by doing this.

Bulk Buy

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Waiting until non-perishable goods that you use regularly go on sale – things like toilet paper, trash bags and dried beans and pulses – and then buying them in bulk is another smart way to save dollars without changing your lifestyle.

Use Coupons

When you’re buying anything, whether it’s groceries or electronics, look online for coupons first. It’s never been easier to find coupons and using them means you can keep buying the things you love, maintaining your current lifestyle, for less. You know it makes sense.

Make Do and Mend

Instead of immediately tossing that dress when the seam split or those shoes when the sole comes away if they are in otherwise good condition, mend them instead. You’ll save bags of money when you don’t immediately toss stuff because it’s no longer perfect and you’ll learn a few handy skills along the way too.

Check Your Tire Pressure Regularly

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If you’re looking for a good way to cut the cost of running your vehicle, then as well as shopping around for the best gas prices, you should be checking the pressure of your tires regularly too. What a lot of people don’t realize is that when you’re tires are at the optimum pressure, your vehicle runs more efficiently, burning more gas per mile than a vehicle where the air pressure is lower than it ideally should be.

Cancel those Memberships

If you actually go to the gym regularly and if you actually watch Netflix quite often, then they’re probably worth holding on to, but if you don’t, then cancel those memberships right now. Why are you paying money for something you don’t use? Most of the time, you only have to click a button to stop paying, and you’d be foolish not to!

Lifestyle changes are sometimes necessary when it comes to saving money, but as you can see, there are lots of really easy tweaks you can make to maintain the lifestyle you’ve become accustomed to and beef up your bank balance at the same time!

 

School is great for many things, but there are some things that it doesn’t prepare us for, and managing money tends to be one of them. Being good with money and being able to manage it is essential if you want to live a comfortable life and be able to have some money left over for vacations or trips or even just to have a meal out once in a while. When you have good financial skills, life suddenly becomes a lot easier. So if you want to improve your financial habits, here are some easy ways to manage your money.

Don’t Spend Without Thinking

If you need to make a large purchase (or any purchase really), then stop and think before you go ahead. Can you afford it, or do you just want it so much that you’re persuading yourself you can? If the item needs putting on finance, think about how that will impact your monthly outgoings; even if it is only a small amount for that one item, if you have many small amounts going out of your account then it will soon add up and could become unmanageable. Make sure that you really can manage the payment or payments, and ensure that the purchase won’t leave you short between now and next payday.

Make A Budget

Making a budget is not everyone’s idea of fun, and it’s true that picking through all your outgoings and noting them all down, listing out expenses, adding everything up, and making sure you haven’t forgotten anything isn’t an ideal way to spend an afternoon. However, once that budget is complete and you can see exactly where you are spending your money, you’ll be glad you went through with it. You’ll be able to see where there are things you’re paying for that you don’t need, and when you spot them, you can cancel or reduce those payments. You may end up being able to save a large amount of money on your monthly bills in this way. Check the budget on a regular basis to ensure that it all still holds true. If you make a purchase using payment plans or pay a credit card or loan off completely, make sure you adjust the figures to show your new potential spending or savings amount.

Go Unbudgeted

We’re not contradicting ourselves here – it’s important to budget and to stick to what you’ve got, but it’s also important to have fun. So try to keep a certain amount of money to one side per month which you can use in whatever way you want; you might get takeout or go to a restaurant, perhaps you’ll see a show or buy some new shoes. It doesn’t matter what it is because that’s the point; it’s fun money. This money doesn’t need budgeting minutely, as long as you know how much you’ve got to play with.

Get An App

Using financial planning apps to track your spending a wonderful idea. Not only are they easy to use, but they provide you with a lot of insight into how and why you spend money, and this could help you save more in the long term. It’s the little purchases you make each month that add up into a problem and can cause over-spending because they don’t seem like such a big deal when you’re handing over the cash or swiping your card. Using an app means that every time you spend money you can make a note of it (or, if it’s connected to your bank account it will do it automatically), then categorize your spending. This way you can manage your money much more easily.

Shop Around

Thanks to the internet and the plethora of online stores, it is likely that you will be able to compare your potential purchase before you commit to paying for it. This way you can make sure that you are paying the lowest price you can. Be sure to take any shipping and handling costs into account as these can make what looks like a great deal become a lot more expensive. As well as shopping around for the best bargains you can also look for coupons and discount codes or even cheaper alternatives to what you were going to buy. A good idea is to put the difference between what you paid and the most cost of the expensive version of the item into a deposit account; you’ll be more likely to look for cheaper ways to buy when you know you’ll be able to put more into your vacation or clothing account.

Save Up

Today is all about instant gratification; if we see something and we want it, we get it. However, this way of thinking can mean that many of us end up in financial difficulty, overspending on things that we don’t need or even particularly want. If you do want something, then the best way to buy it is to save up for it. It will, of course, take longer, but it will be worth doing because you’ll know as you buy it that you worked hard to get it; there will be a greater degree of satisfaction in that. Not only that, but you’ll know you won’t have overspent and left yourself short, and neither will you have to pay the interest that would be due if you bought the item on a credit card. Another bonus in saving for something is that by the time you have the money you may not even really want it anymore, so you can spend your money on something else.

Limit Your Credit Card Use

If you aren’t great with money then limiting your credit card usage is a clever idea. Many people run out of cash and then turn to credit, but they don’t give any thought to how they will pay anything off, or how long that might take them. Credit cards can be useful; they can actually build credit, for example! However, the key is to pay off as much as possible – preferably the entire balance – every month. If you limit your credit card spending and make the largest payments you can, then you’ll realize that although perfect in an emergency, it’s far wiser not to use them for everyday purchases.