Money Myths Debunked

Jessica Quindlen: [00:00:00] Welcome back to the Sound Cents podcast. I'm Jessica Quindlen. Today, we're going to discuss money myths. I have Financial Coaching Supervisor, Emma Protsik. Hello, Emma.

Emma Protsik: Hey, Jess.

Jessica Quindlen: And Community Education Lead, Laura Straub. Hello, Laura.

Laura Straub: Hey.

Jessica Quindlen: All right. So we're just going to dive right in. I collected some money myths I knew of and some that friends had mentioned to me. Let's start with money myth number one. You need to be wealthy to invest. Emma, talk to me.

Emma Protsik: Oh my gosh. We hear that one constantly, but investing really is for everyone. The best kind of tool you can have when it comes to investing and growing your money is time. So even if it's just $5 a month right now, being able to make those deposits, no matter how small, that will just continue to grow.

Laura Straub: Yeah. That power of compound interest is so key, just starting whenever, so if you haven't started, start now.

Jessica Quindlen: No, I love that. I think investing so often feels like something unattainable because you have to have millions of dollars to start. And it's so true. You can have $5, hey, even $1. There are some stocks out there you could get for that. So I love that.

Emma Protsik: The apps make that just so easy too where you can do those little [00:01:00] contributions, set it up, reoccurring. So it's really attainable.

Jessica Quindlen: That's great. All right. Number two, debt is always bad. Laura.

Laura Straub: So yeah, not all debt is bad. We do have some good debt that can help us like student loans and mortgages. Those have long-term benefits that we can utilize. Where we get the idea that all debt is bad is when we have credit card debt that we just can't manage our spending, we have that really high interest and that's where it can be harmful to us.

Not necessarily still bad, but it's harmful to our credit score and shopping habits as well. So just being mindful of that, really starting that budgeting, staying away from high interest credit cards, things of that nature.

Jessica Quindlen: Or I think certainly with the high interest credit cards, making sure you can pay them off.

Laura Straub: Yes.

Jessica Quindlen: If they have some benefit you need the card for, certainly. Okay, no, I love that. Alright, so number three, budgeting is too complicated. Emma, I know you hate budgeting. An emergency fund, [00:02:00] it's your least favorite thing, so talk to me about how complicated it is.

Emma Protsik: Another one that we hear a lot. I completely understand where this is coming from. I think people are just kind of what they mean when they say it's too complicated is it's a little too overwhelming right now. There are so many different ways to do your budgeting. Going back to online tools, there's just so many ways to make that a little easier for you, or automated.

Budgeting is simply just tracking the income you have and how it's coming out. There's lots of different apps and tools that you can utilize, but of course, you can lean on other professionals if it is a little too overwhelming for you diving into your own personal budget.

So our financial coaching program is a great way. You can meet with anyone for free and they can help break that down for you. I highly recommend checking out budgeting videos on YouTube, seeing how other people do that. It's about finding what's going to work for you. So, if you're looking at a method thinking this is way too much, then that's not the style meant for you, and just keep trying until you find something that sticks.

Jessica Quindlen: No, and I love that. I love that there's options too. Budgeting isn't a one size fits all. You can make it [00:03:00] work for yourself. All right. Number four, retirement planning is only for the old.

Laura Straub: No, it's not.

Jessica Quindlen: Also, you don't have to be old to retire. I want to also throw that out there. 65 is not old.

Laura Straub: The key with retirement is just starting early if you can because that compound interest we were talking about before is so key with retirement. The more you can start when you're younger, the more it'll just grow with time. So really just starting as early as possible for that retirement, kind of getting a game plan of like, what does it look like when you retire?

Are you going to go on world trips? 65 isn't that old anymore. You can still do a lot of things with your life, so just kind of getting that roadmap set in place now and plan in place. It'll make it so much smoother for you when it comes to retirement as well, because you already have a plan in place that you want to achieve.

Jessica Quindlen: That's great All right. Number five you need a financial advisor to manage your money.

Emma Protsik: So I know I did talk about getting professionals [00:04:00] involved and how that can be beneficial. You know, when you get to the advisor space, typically you're paying them something whether that's a portion of the returns you get or a fee based on their services. It's not required, really.

There are so many tools, just education, like different videos, articles that you can read to really dive into it, to get a good understanding yourself. While I think it is beneficial to get that unbiased professional involved, especially when you're just starting out, you can do a lot of that research yourself. And then I think that's also just really great because then you know those things and you can apply it and be a little bit more self-sufficient with it.

Jessica Quindlen: I agree. Also, you spoke about financial coaches. Coaches aren't managing your money. They are simply, teaching you, training you, coaching you, etc. Whereas, this myth is really like, I don't do anything with my money. I need another human to manage it all. So I love that. All right. Number six. There's no way of knowing how much money I'll need in retirement. I have no idea.

Laura Straub: Yeah. While it is hard to estimate some of it, especially [00:05:00] with inflation rates, we're all guessing a little bit there. There are some really great tools out there that you can get a good glimpse of how much you might need.

There are lots of different programs, estimators that you can plug in, like, this is what I want to be doing, this is how much I would spend on these things to get a good picture of how much you would need to save. So, there are still some really great ways to get a good ballpark number.

Again, it's not going to be perfect, so just kind of having a good idea of your desired lifestyle, maybe what kind of healthcare might be involved and how much it might need to be. And then again, those good estimates of inflation can just help you get a good ballpark number.

Jessica Quindlen: And I love you saying it doesn't have to be perfect because I think that's such a good takeaway for money in general. Like it doesn't have to be perfect. There may be moments where you do have credit card debt because something happened or your emergency fund, you were doing great, and then all of that money had to go away because of an emergency.

And so it's never going to be perfect, but just doing what you can. All right. My final money myth. Credit [00:06:00] cards should be avoided at all costs.

Emma Protsik: Ah, scary credit cards. I will actually say it depends for this one. I think it is important for you to understand how you interact with different products.

As an example - my sister is okay with me sharing this - she is not somebody that should be using credit cards, at least at this point of her life. So, she is doing more of that cash management system, but credit cards are an amazing tool. If you, have an understanding how to keep those balances low again, only charging what you can actually pay off.

With the rewards benefits, that saves you money, whether that's looking into travel benefits or cash back programs. Of course, credit cards also help us build our credit. These are accounts that we can keep open for our entire lives, building that positive credit history.

Different factors come into play with that, but it's about knowing you and how you're going to interact with it, and being mindful of how your biases might come into play and get you in a sticky situation you don't want to be in.

Jessica Quindlen: That's great. I love it. Any other money myths that you all, thought of or needed to add?

Laura Straub: [00:07:00] A lot of folks already have A+ credit, but they're not in “Excellent,” or they don't have the highest possible right number. Just knowing if you do have A+ credit you are good.

You are, you know, 100 percent if you're like that teacher-type grading scale. You are doing fine. There's no reason to open new credit or new loans just to get to 850. If you're sitting at 740 or above, you're doing really well.

Jessica Quindlen: That's a really, really good one. All right. Well, that brings us to the end of our show. Emma, Laura, thanks so much for being here. It was great having you.

Emma Protsik: Thank you.

Jessica Quindlen: And now for our new segment brought to you by Dave Logan, the iconic voice of the Denver Broncos.

Dave Logan: Hi, this is Dave Logan, and it's time for your 2 Minute Money Drill. A quick tip to help you make smart money moves fast. Whether you're planning to save or looking for ways to get ahead, here's a financial play you can put into action right now.

Your [00:08:00] first priority in saving should be your emergency fund. Aim for three to six months worth of living expenses, in case the unexpected happens. Start small. $500 to $1,000 is a good goal to begin. Once you hit that goal, keep building.

Jessica Quindlen: Thank you for listening to Sound Cents from Ent Credit Union. Be sure to follow our podcast as well as rate and review us. I'm Jessica Quindlen. I will see you in two weeks, same time, same place.