The Biggest Things People Get Wrong About Money

The Biggest Things People Get Wrong About Money

Financial Literacy   Zina Kumok

I’ve gotten to a point in my career where I’m commonly referred to as a financial “expert”. I’ve worked hard to broaden my knowledge and fill in the gaps, so I feel pretty comfortable in that role. When a friend or colleague asks me for advice, chances are I can help them in some way.

But the more I learn, the more I realize how ignorant I actually am. Money is such a diverse and dynamic topic that it’s impossible to know everything, and even the most basic fundamentals can change over time. The best you can do is keep an open mind and actively challenge your assumptions. 

We all get things wrong about money. Here are some of the most common – and most dangerous – misconceptions.

“Keep 30% Balance On Your Credit Cards.“

I’ll never forget this argument I had with my friend Chelsea. We were talking about credit card rewards programs and how awesome they are. “Of course, you should never hold a balance on them, no matter what kind of cash-back you’re getting,” I told her. She disagreed, saying that you should always carry a small balance on your card or you won’t build any credit.

In my opinion, this is probably the most persistent credit myth still making the rounds in 2019. It’s true that you need to have a balance on a card when the statement closes. That balance will then be reported to the credit card bureaus, but once the statement closes, you can pay off the entire amount without hurting your credit. If you pay off the balance before the statement closes then the card provider will report your balance as $0. 

An easy way to set this up is to create automatic payments that will go in effect after the statement closes, but before your due date. Go to your credit card account and click on the payments section. Then, create automatic payments for the full statement balance and choose a withdrawal date on or before your due date. 

“Investing is the same thing as gambling.”

When I was in middle school, the dot-com crash happened. I don’t remember much about it, except for the fact that a lot of people lost a lot of money. A year later, 9/11 happened and the market tanked again. When I was a freshman in college, the housing market crashed and the Great Recession began.

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