For many of us, keeping our household finances harmonious has long been a struggle. Even before any of us had heard of COVID-19. Now, however, the battle to keep ourselves above the breadline has never been more fiercely fought. Many of us have lost income, and some of us have lost jobs. Some of us who are self-employed small business owners or freelancers have lost sales, customers and clients. In households all over the country, it can feel like a struggle to keep our heads above water financially. Especially with the kids heading back to school after the summer and all the inevitable expense and anxiety that it brings.
Nonetheless, there’s a difference between difficult and impossible. Especially when you consider the fact that many of the assumptions that we assume hold true are based on little more than myths and misconceptions. In this post we’ll look at 4 common myths that could actually be holding back your household finances…
You shouldn’t pay into your savings account if you’re struggling financially
When did we get into the habit of thinking of saving as a luxury? Saving is actually even more important when times are lean. It can keep us from having to rely on credit to get us out of a financial tight spot, keeping us from high-interest debts like payday loans.
By all means pay in less when times are difficult. But you should always pay something in every month.
Only rich people invest
Savings can be a great way to grow your wealth while preparing for a rainy day. But you can also supplement your savings with some prudent investing to potentially grow your wealth a little faster. And it’s a fallacy to assume that only wealthy city types choose to do this with their money. Indeed, the proliferation of new digital apps has democratised investment, meaning that virtually anyone can do it from the comfort of their smartphones.
You have to stick with your car insurance policy… even if it’s a bad deal
Every car needs insurance. But no car needs an insurance policy that wastes its owners hard-earned money. Don’t make the mistake of assuming that you have to see your policy through to completion if it gives you a bad deal. If an insurance broker finds you a cheaper and better policy, you can actually switch before your current policy has expired. There’s usually a fee, but this will pale in comparison to your savings and your new insurer may well pay it for you.
You’re too young (or too old) to think about your pension
Unlike our transatlantic peers, we’re lucky enough to get a national state pension. Nonetheless, this affords us less than £200 a week at the time of writing, so it’s probably best not to rely on it exclusively to keep you afloat.
Whatever age you are you’re never too young or too old to start paying into a private or workplace pension to supplement what you’ll get from the government.
You should never take out a credit card
Finally, while credit card debt can spiral out of control, that doesn’t mean that it should be avoided altogether. If you box clever with cards that have 0% introductory interest rates and pay them off before those rates expire, you can get out of financial crises without getting mired in spiralling interest rates.