Debunking the myths of personal finance
People love to talk about money. More importantly, people love to tell you how to manage your finances, such as how much you should be earning, whether you’re saving enough, why buying is better than renting, how to invest and what to invest in, and much much more.
We’re here to break down some common myths and misconceptions about personal finance:
- My savings are safe in the bank, right?
You’ve probably had a bank account since before you can remember, and you’re probably pretty confident that keeping your savings in the bank is the safest option.
Unfortunately, letting your savings sit idly in a bank account can actually do more harm than good for your future buying power. The growing rate of inflation far outweighs any interest earned on your savings, so talk to us about your savings and how much you can safely keep in the bank.
If you’re looking for another, better way to watch your money grow, talk to us about investing.
- Investing is just for the rich, stock-broker types
Wrong, you don’t need millions in the bank to be able to invest. There is actually no minimum amount needed to get started.
Even if you start with a couple of dollars a month, you can watch your funds compound over time. Compounding essentially means your investment will snowball, so you can watch your return grow exponentially over the years.
Whether you’re just starting out with your finances, or you’re getting closer to retirement age, there are multiple ways to invest. There are plenty of experts who can help find the right investment type for you.
- You only need to plan for retirement after you hit 40
When you’re just starting out on your professional and financial journey, retirement might seem too far away to consider seriously, but we recommend taking extra steps to bolster your retirement fund in your 20’s.
Your superannuation is key to a comfortable retirement. The current minimum rate for superannuation is 10.5% of your salary, which should be paid by your employer at least quarterly. You can make voluntary contributions to your superannuation which will also boost your overall retirement fund, as your super will have time to compound and grow over the years.
We also recommend that you familiarise yourself with your superannuation fund, how much you are paying in fees, whether you have insurance and whether you are happy with the level of support you receive.
- You need to be old or rich to have a will
It might seem confronting to think what might happen when you die, but planning for the future will give you and your loved ones security and peace of mind.
If you don’t have a will, your assets will be distributed by an administrator from probate court. Writing a will or laying out your estate will ensure your assets will end up in the right place.
Remember, everyone’s financial situation is different and what works for one person might not work for you. When making big, financial decisions, don’t just listen to Mum or Dad, or that one friend from Uni who did a unit on accounting, seek appropriate advice by consulting with your trusted Financial Adviser.