More Financial Mythbusting
On this episode of Financially Naked: Stories from The Financial Gym, Catriona and Garrett, two Certified Financial Trainers, are here for the third installment of financial mythbusting. This series is about challenging some of the most common (and persistent) myths in personal finance they see as Trainers. From social media misinformation to outdated family advice, today, they break down why the answer to most financial questions is “it depends” and why understanding your unique situation is the most important part of making financial decisions.
Podcast Notes
Financial advice isn’t one-size-fits-all. Social media can be one of clients' biggest sources of confusion and misinformation. What makes good ‘content’ online often lacks context or nuance.
Even advice from well-meaning friends, parents, or grandparents can be outdated or irrelevant.
The real answer to most financial questions? It depends.
Everyone is starting at a different place and has different goals and desires. This is why understanding the whole picture is important when making financial choices.
The best financial decisions come from knowing where you are, what you want, and how to align your actions with your timeline..
Myth: You Should Aim for a Big Tax Refund
It’s common for people to be disappointed if they don’t get a large refund when they file a tax return, but a tax refund is not free money.
A large refund means you gave the government an interest-free loan for a year.
While this can be beneficial for people who struggle to save, that money could have been earning interest in a high-yield savings account, used to pay off debt, or even invested.
While getting a refund isn’t bad, a good goal is to be as close to $0 owed or refunded as possible.
While Financial Trainers are not tax professionals, they help clients understand how taxes fit into their overall financial picture.
Myth: Renting is Throwing Money Away
Owning a home is a goal for many people. Building equity is great, but it’s not the only way to build wealth.
With high interest rates and rising housing costs, it’s important to run the numbers to understand if purchasing a home makes financial sense for you and your goals.
Renting often comes with predictable costs for the term of the lease, whereas owning a home can include surprise expenses for repairs and fluctuating property taxes.
Homeownership comes with large upfront costs and ongoing maintenance. It’s important to have a sinking fund so you’re prepared for these as they come up.
The right choice depends on your goals, budget, location, and readiness/desire to take on the responsibility of home ownership.
More Myths: Wills & Credit Cards
Myth: You don't need a will if you don’t have assets.
A will isn’t just about assets or money. It’s about documenting your wishes, protecting your loved ones, and naming someone to speak for you if you can’t.
Wills can include burial preference, healthcare directives, and guardianship plans. It is an important part of your financial plan, but one that people often avoid, because thinking about death can be uncomfortable.
Myth: Having too many credit cards hurts your score.
This is not true if you are managing your cards well. If you use your cards strategically for points and pay them off in full every month, having multiple cards will not hurt your credit.
Earning credit card rewards and points only works if you are not carrying a balance. The high interest will outweigh any benefits of credit card points. More lines of credit can help you build your credit history.
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 Trainer
Catriona Williams, Certified Financial Trainer
Garrett Faulconer, Certified Financial Trainer