Personal finance experts tackle “wide range” economic misconceptions

Managing your finances can be a challenge, especially on social media, when you are at odds with people and often face misinformation, especially when it is fed to people on social media.

Buying to the common misconceptions surrounding money is harmful and you can put someone behind you when it comes to financial health.

Jonathan Kim, a personal finance expert and finance director for online savings platform Raisin, set his sights on an interview with Fox Business.

He also opposed the suggestion that people don’t need a savings account and that no one should save money before someone is in debt.

“Kim said you don’t fully understand some of these ideas about paying off debts before saving, and why you need to save and why certain debts aren’t terrible.

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The misconception that “it’s not worth saving now unless you can clean up a lot” is a common thing he said he saw on social media.

Kim said it’s very easy to fall into this trap that thinks “If you can’t save X percent or X dollars, it’s not worth the effort.”

He said consistency with savings is key, and “starting with something like $10 a week will help you build that financial resilience and you can build a habit that sticks to you as you progress.”

When it comes to high pay and financial success, Kim said that in terms of financial health wisely managing money, the reality is that there is “this myth and this propaganda” in which high pay is equivalent to financial success.

Bringing a big salary home “is obviously great, but I think it’s also very true that lifestyle creep is very realistic. Without financial discipline and conscious salvation and spending habits, lifestyle creep will happen to you and even after you’ve been promoted, or even after you’ve been promoted, you’re fighting for yourself.

Budgeting could be a useful tool to prevent lifestyle creep, Kim says, and it pushes back the idea of ​​being “perfect” to work.

“You can generally understand what’s going on and what’s going on to get you started,” he said. “And as you track it, you can see it over time, “Oh, I was just spending the amount of x, but now I was spending x twice as much. What happened there?” ”

He also said that budgeting helps people “deliberately spend” and doesn’t mean that someone needs to “everything” to focus on essentials and “everything” that brings you joy.

Kim touched on buying now and paid for later service and whether it could become a good budgeting tool.

Buy now. In recent years, pay has become increasingly common later as people have split up and are trying to fund less purchases.

Public members pass floor ads for Klarna, a high-tech company, a European e-commerce company that allows users to buy now, pay later, or pay in installments. (Daniel Harvey Gonzalez / In Getty Images / Getty Images)

“If you don’t have the money now so buy it later and pay later, that means you can’t afford it,” he told Fox Business. “So, if you can’t afford it today, you can’t afford it, so that context can lead to buying now and later payments, which can lead to accumulating debts to you.

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He said it was “somehow intertwined.”

“If you have high interest debt, such as credit card debt, variable mortgages, student loan debt, something that really hurts you or something that could raise interest rates, you certainly want to reward it,” Kim said. “But at the same time, the other side is that you could have been someone who got a mortgage five years ago and had a very low mortgage rate. In that sense, it doesn’t make sense to reward it right away.”

Building savings while simultaneously creating dents in debt can be extremely beneficial.

He said it’s important to have a financial plan and pay off your debts, but “things can happen in your life,” so setting up emergency funds with savings can prevent a snowball of debt and interest in case something happens.

He also said having a savings account is better than using a checking account.

If someone keeps all their money in a checking account, Kim says, “it’s actually easier to use and makes it difficult to track your goals.”

By setting up emergency funds with savings, you can prevent a snowball of debt and interest if something happens. (istock / istock)

He noted that checking account balances will rise and fall with spending and income, making it difficult to monitor savings. Also, many people are very low in funds or “your money doesn’t work for you,” says Kim, which says very low or nothing.

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A dedicated savings account is “a physical boundary, in a sense, you know that the money is separated and can grow over time.

They can have high interest rates that help their savings passively grow over time, he added.