Young people are at the height of their youth and vitality, but they are also vulnerable new citizens that are easy to manipulate. Years of bad advice and poor decisions have become fixtures in financial circles and these poor advice pieces are passed on to young people that are just starting out. There are plenty of financial myths that young adults fall for, but these are some of the most prominent myths that the Factum Financial team has compiled. Do you know a person that has become a victim to one of these financial myths?
Myth #1 – A College Degree = Success
College and education is a great thing and the opportunity to go is absolutely an amazing privilege, but that’s exactly what it is — a privilege. College has surreptitiously slipped into the traditional American dream as a must and the perception is that you cannot succeed without college. The truth is that experience and hard work are often what you need to be successful and a college degree doesn’t guarantee success. For many people, it actually means years of paying back student loans with a bunch of interest and perhaps not even working in the field you study.
College isn’t a bad thing, as long as it makes sense to a life-long plan, rather than just the natural choice to follow high school. The good news is that you don’t have to go into massive debt if you are willing to work hard and leverage your finances properly to succeed. Learn more about that here.
Myth #2 – I Won’t Be Able To Survive Without Credit
This is one of those pervasive financial myths that young adults fall for, but it’s not just young people that believe this. Your credit score is essentially a score that tells lenders how ready you are to borrow money. Borrowing money means that you enter repayment and the reason people lend to you is because they earn a sizable amount in interest while you pay that back. If you rely too heavily on credit and financing, you will end up spending more over the life of a loan because you have to pay back the principal loan and the interest. Sometimes you need credit and it makes sense to borrow from the bank, but it’s not the only way to survive. There are ways that you can finance purchases and pay yourself back the principal and interest into your own personal banking system. Click here to watch a short video on that process.
Myth #3 – I Have Plenty Of Time To Save For Retirement
This is one of the most common financial myths that young adults fall for because they believe that they have an abundance of time. And when you’re 25 and fresh out of college, retirement seems like years and years away. However, the amount of time a person has before retirement is just potential time a person has to get money working for them. Even a light savings plan or a cash-flow growth system could pay dividends in the long run. If you start saving and growing wealth when you’re young, you have more opportunity to enjoy retirement without stress later in life.
Myth #4 – I Need To Put Money In The Stock Market To Grow My Wealth
Speaking of leveraging your time, one of the biggest financial myths that young adults fall for is that the smartest way they can make money work for them, both for retirement and for their expenses or lifestyle, is through the stock market. Most young people aren’t even contributing to a 401(k), but there are some that are trying to use the exponential returns on the market to their advantage. However, the problem that’s obvious to us here at Factum Financial is two fold:
- Volatility – The market rises and falls daily. It can take hits based upon the economy, the words of the president or foreign dignitaries, and even the weather and that’s all in an up market. Recessions can devastate portfolios and not everyone has years to make back the money that gets lost in the market.
- Control – The market is also not nearly as attractive as most financial advisors would try to convince you. They promise guarantees of returns that sound ridiculous and that’s because they are. They tell you that money can grow tax free in accounts like a 401(k), but they don’t tell you that you will have to pay tax on that money later, when the tax rate will have certainly grown. And finally, they promise that they are there to help you grow your wealth, but don’t tell you how much they are going to skim off the top from your wealth without regard to how your money is performing.
These financial myths that young adults fall for aren’t just passed down from well-meaning ineffective family members. There are financial advisors that are imparting this stuff! And yet, they tell you this is the system that you have to live within!
At Factum Financial, we give people the education that they need to beat this system and tear down these myths. Our wealth strategy team wants to help you create a system with guaranteed compounding that you can rely on for life and your family can rely on when you graduate from this life. Would you like a wealth solution? Contact Factum Financial now for your free wealth strategy session.