More Financial Mythbusting with Catriona & Kylie
Welcome to another episode of Financially Naked: Stories from the Financial Gym. In this episode, Catriona and Kylie delve into common misconceptions surrounding taxes, self-employment, credit card points, and more, offering valuable insights to empower listeners in their financial decisions.
Continuous learning and openness to new approaches are essential for achieving financial success, and our hosts are here to guide you every step of the way. Join us as we challenge conventional wisdom and share your wildest financial advice encounters—let's bust some financial myths together.
Podcast Notes
Myth: Is a Large Tax Refund Always Beneficial?
While receiving a large tax refund may feel great, it's important to question whether it's the most financially savvy choice.
You pay taxes throughout the year, and a refund means you've overpaid. It's not technically bad, but it provides the government an interest-free loan.
If you want to change your tax outcomes, you can adjust your W4 form. The IRS website has tools to help with this. You should do this whenever you have a life change, like moving, getting married, or having a kid.
Myth: Earning More Money Means Taking Home Less
Earning more income does not necessarily equate to a lower take-home pay. The tax bracket system operates like buckets, with higher income taxed incrementally at higher rates.
You will pay more taxes, but it won't bump all of your money into a different tax bracket, only the part that makes it into the next bucket. When you get a raise, you still benefit from additional income and retain more overall, even if you pay a little more in taxes.
Myth: The Write-Off: Spending to Save on Taxes as a Self-Employed Person
If you are self-employed, a business, or a freelancer, you only have to pay taxes on your profit. This is why spending money on your business reduces your taxable income.
Lower taxable income is not the same as free income, and write-offs are not a permission slip for overspending. You should make purchases for your business that you need or will help you grow, and keep track!
Myth: Financial Boundaries Are Rude
While it can feel challenging, establishing financial boundaries is not rude. It's a crucial aspect of personal financial management. When you have goals, it's okay to communicate that you are focusing on those.
The key is in the delivery. You can positively communicate your boundaries. You don't have to shame people for their financial choices, just share as much as you want to about your choices. People who care about you will want to support your goals.
Myth: Credit Card Points Always Pay Off
While credit card points can be enticing, they only benefit those who pay off their balance in full each month.
If you cannot pay your balance in full each month, the interest will outweigh the benefits points provide.
If you spend more money than you need to in order to earn credit card points, you're still spending money you don't need.
Myth: The Most Logical Financial Choices are the ‘Best’ Ones
It's always good to run the numbers, but you don't always have to follow the most mathematical 'correct' plan. The best financial plan is one that feels good to you and you know you can stick with.
For example, consolidating debt may seem logical, but it can lead to further debt accumulation without addressing underlying spending habits.
Personal finance is personal, and what works best varies from person to person based on individual circumstances and preferences.
If you want to work with a Certified Financial Trainer to help navigate your finances, schedule a free warm-up call today! If you have any ideas or questions for the show, send an email to trainerpodcast@fingyms.com.
Resources
Meet The Trainers
Meet Catriona Williams, Certified Financial Trainer
Meet Kylie Lipinski, Certified Financial Trainer