During the Easter break, it’s easy to stray away from ‘term-time budgeting mode’ and splurge some of your student loan on a holiday or a few heavy nights-out with friends from home. While these are undoubtedly a lot of fun, you could find yourself struggling financially next term and scrambling for money throughout the summer. You may hear other students believing the following money myths – we’re here to advise you to think them through first!
(Psst – there are 5 Easter Egg-related puns hidden in this article. If you can find them all, Tweet us @BlackbullionGo with all 5 puns for your chance to win an Amazon Fire Tablet)
1. “I’m too young to worry”
The financial decisions you make now could have a lifelong impact. Too much debt today will translate into much more money owed later. You don’t need to be a financial expert to see that the sooner you start saving the more you will have at the end, so it’s best to hop to it.
Think about this: if you want to run a marathon in two months’ time, you start training now so you can ease yourself in without getting an injury. You don’t suddenly start training the weekend before. As with exercise, so it is with money.
2. “I’ll just figure it out”
We aren’t born understanding compound interest. Few people have an intuitive understanding of financial matters.
The only way to get good at something is to learn and practice and then practice some more. The school of life is an expensive place! Becoming financially capable isn’t just a “thing”, it’s a way of life.
There are countless books, articles and videos covering everything from debt to the stock market. Knowledge is everywhere just waiting to be grasped.
The best investment you will ever make is in yourself, so it’s best to hatch a plan.
3. “All debt is bad”
Unmanageable debt is bad, high interest debt is bad, too much debt is bad but debt itself is neither good nor bad.
Much like medicine can be both hugely beneficial and terribly dangerous; debt can be used as a tool to help you get wealthier with time (by funding an education for example), or it can be a tool for accumulating useless junk which will for sure make us poor.
4. “I’ll just win the lottery”
It’s very, very unlikely that you will. Statistically you’re more likely to become an astronaut (odds: 1 in 12 million) than you are to win the lottery (1 in 45 million).
It’s near impossible to gamble your way into a fortune, though lots of students are shell-shocked losing lots of money finding that out!
There is no quick fix. There is no easy money.
And it’s not just a student problem – 8% of Britons are relying on a lottery win to fund their older age.
5. “Low-interest rates are bad”
Actually, low interest rates are great if you have any sort of debt.
Do you want to be a homeowner? If you had a mortgage today of £150,000 you would pay about £800 each month (4% interest rate) but it would be £1,024 at 6.5% (like it was before the crisis) and a whopping £1,933 at 15% like they were in the late 80s.
Interest rates always benefit one demographic and penalise another. Low rates favour the young and indebted while high rates are more likely to be favourable to older people and those with savings.
6. “All saving is saving”
We say that we “save” when we get a discount on something, and we say that we save when we put money into an account to be used at a later date. “Saving” on a pizza is NOT saving: it is a shame that we use the same word to mean two completely different things.
There are so many voucher and discount sites these days (and they can play an important role in money management) but they make us feel as though we’re saving when actually we are spending. Maybe we’re spending less on something we had to get anyway (20% off an electricity tariff) but we could be spending less but on something we weren’t planning on getting in the first place (10% off shoes we didn’t want or need but had a voucher for).
Happy Easter everyone – have a cracking time!