Financial Myths | blog.firstffcu.com

In the world of personal finance, there are myths and misconceptions that can hinder our ability to make informed decisions and achieve our financial goals. By debunking these myths, we can gain clarity and navigate the complexities of personal finance more effectively. Keep reading as we explore common financial myths and the truth behind them!

Myth 1: Credit unions are just like banks.

Reality: Credit unions are member-owned, not-for-profit financial institutions. Credit unions prioritize the best interests of their members rather than generating profits for shareholders. At First Financial, for example – you can benefit from lower loan rates, personalized customer service, and access to a wide range of financial products tailored to meet your unique needs.*

Myth 2: Paying the minimum on your credit card statement is fine.

Reality: Paying the minimum balance on your statement actually costs you more in the long run. You’ll end up having to spend more on interest this way, which could double the cost of the items you purchased. Paying your credit card statement on time and in full every month can help improve your credit score and save money on interest too. See our handy guide on credit card mistakes to avoid to learn more.

Myth 3: Saving money is solely about setting cash aside.

Reality: While saving money is essential, there are various strategies to make your savings work harder for you. Exploring different savings products, such as high-yield savings accounts, certificates of deposit (CDs), or individual retirement accounts (IRAs) – can help you grow your savings over time and work towards your financial goals.

Myth 4: Loans are only for emergencies or significant purchases.

Reality: Loans can serve multiple purposes beyond emergencies or large purchases. They can be valuable tools to seize opportunities, consolidate debt, or invest in personal or business ventures. Understanding the different loan options available and their terms, can help you make informed decisions that align with your financial objectives.

Myth 5: Retirement planning is only for the wealthy.

Reality: Retirement planning is crucial for individuals at all income levels. Regardless of your current financial situation, developing a retirement strategy early on can help you secure a comfortable future. Here at our credit union, we offer the First Financial Investment & Retirement Center to help support your future through investments and insurance.**

By debunking these common financial myths, you can gain a better understanding of personal finance and make more informed decisions to achieve your financial goals. Whether it’s exploring savings and loan options, or planning for retirement – taking a proactive approach to your financial well-being is key.

Remember, knowledge is power – and First Financial is here to provide you with all the tools for your financial success. For more insights and tips on personal finance, check out our First Scoop Blog!

*$5 in a base savings account is your membership deposit and is required to remain in your base savings account at all times to be a member in good standing. All credit unions require a membership deposit. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Some restrictions apply, contact the Credit Union for more information.

**Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Financial myths are a force behind one of the biggest threats to your financial future – yourself. Here are some personal finance myths that could be costing you money and endangering your future security.

Myth 1: Two incomes are better than one. Truth: Today’s families often have two incomes out of necessity. They make more money than a one-income family did a generation ago. But, by the time they pay for the basics – an average home, a second car to get the second spouse to work, child care, health insurance, taxes, and other essentials, that family actually has less money left over at the end of the month to show for it.

The assumption in the myth is that with two incomes you’re doubly secure. But if you’re counting on both of those incomes, then you’re in serious trouble if either income goes away. And, if you have two people in the workforce, you have double the chance that someone will get laid off, or that someone could get too sick to work.

Housing prices are rising twice as fast for families with kids, and a big reason is dwindling confidence in public schools. People are bidding up the prices on homes situated in school districts with good reputations. The only way for a typical family to afford one of those homes is for both spouses to work. Average mortgage expenses have risen 70 times faster than the average family’s primary income, so, families are required to keep two incomes.

When two incomes are a necessity, the question of whether two may be better than one is moot. Busting this particular myth means understanding the true financial stakes involved in deciding to have children and raising a family, based on your personal situation.

Myth 2: Owning is always better than renting. Truth: The money you pay for rent is a necessity like your other living expenses. Do you consider the money you spend on food to be wasted? What about the money you spend on gas? Both of these expenses are for items you purchase regularly that get used up and appear to have no lasting value, but are necessary to carry out daily activities.

If you own a home, unless you paid cash for it, you pay a mortgage (and it’s likely as much as you’d be spending on rent), plus other expenses like property taxes, insurance, maintenance, etc.

The choice between owning and renting is often a financial toss up. Busting this myth means understanding the most important reason to buy a home. Decide how badly you want to settle down for the long-term and invest in a permanent residence.

First Financial offers a number of great mortgage options, including refinancing – click here to learn about our 10, 15, 20, and 30 year mortgage features and see what a good fit for your home is!*

First Financial also offers a Mortgage Rate Text Messaging Service so you can receive updates on our low Mortgage Rates straight to your mobile phone. You can subscribe to our Mortgage rate text message service by signing up for text alerts, and receive instant notification when our mortgage rates change.**

Myth 3: A near-perfect credit score will get you the best loan rate. Truth: Every expert, credit bureau, and loan officer has a different opinion as to where the threshold for excellent credit lies. In addition, “near-perfect” can be a relative term. Do we mean “near-perfect” as in “excellent,” or as in “perfect,” which doesn’t exist? Different loans and lenders have different standards.

Generally, any credit score in the mid-700 range and up is considered excellent credit, and will get you credit approvals and the best interest rates. But at this high end of credit scoring, extra points don’t always improve your loan terms much. Sure, the higher your score, the better. But even an extra 50 points in this range doesn’t always help you get a better rate on your next loan.

Those extra points can serve as a buffer if a negative item shows up on your credit report, however. For example, if you max out a credit card, you can get dinged 30-50 points. An extra 50 points would absorb the hit and minimize the possible damage.

So, there really is no “magic number” when it comes to credit scores. Busting this myth means understanding that more than just your score is taken into consideration. To get the loan you want, you may need a high credit score, no negatives in your credit file, and adequate income to afford it.

Myth 4: You need to earn more to save more. Truth: Your ability to save is defined by your discipline to sacrifice and set aside a percentage of your spending. Your income level is not really a factor. And no matter the amount, the younger you start saving, the more years you’ll have for your money and any interest earned to work its magic. You may decide you want to invest some of your savings too – talk to a financial planner and decide if investing in stocks and mutual funds might be a good option for your savings goals.

So, savings is not some arbitrary amount – but a discipline. Busting this myth means understanding that you need to sacrifice some of your spending now for financial security later. You simply have to decide how important that security is to you.

Consider how these personal finance myths and others like them could be contributing to money problems you’re experiencing now, and pose more serious trouble for your future.

“Busting” these myths offers the answers you need to take action and change your behavior with money – and assure your financial security.

Article Source: http://www.nasdaq.com/article/why-these-4-personal-finance-myths-perpetuate-money-problems-cm396086

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Minimum mortgage loan amount is $100,000. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Rates and APRs listed are based on a mortgage loan amount of $250,000. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

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