Expensive myths you can't afford to believe
From savings to credit ratings, we explore some of the most common misconceptions about money.
I will start saving when I make enough
According to NS&I, more than half the population save regularly, attempting to put £192.36 or 15% of their average monthly income in a savings account.
However, HSBC research reveals that 30% of adults have less than £249 set aside as a financial safety net which is the equivalent of just five days average take home pay.
At the moment, savings accounts are not offering the most attractive rates of interest. However, it’s never too early to get into the habit of stashing your money away. Remember, the sooner you start saving, the longer your money has a chance to grow.
Competitive savings accounts are available with minimum investments of £1 and some allow instant access with no withdrawal fees. Currently, The Post Office offers a competitive Online Saver with 2.90% AER and unlimited free withdrawals.
ISAs provide an ideal savings opportunity and they're tax free. Halifax's Fixed Rate ISA offers you the option to save over 1 to 4 years with up to a 4.24% AER.
Bad credit stays with you for life
Your credit score represents how much risk you pose as a potential customer to a lender.
This is worked out based on your credit history (how you have used credit in the past).
While an IVA and bankruptcy is recorded for six years, it may only take a few months to clean up your report if your offenses are relatively minor (such as not being on the electoral roll).
Missed loan repayments stay on your personal record for up to 36 months, once you have cleared the debt or resolved the offence, this will be taken off your record.
Cheap insurance is the best
As we've told you before, many of us could make a tidy saving by switching insurance providers.
When you're comparing quotes, it might be tempting to simply opt for the cheapest. Remember to check your potential policy offers the level of protection you need.
Few people take the time to read policy terms in their entirety before signing up as many believe all policies are the same.
This is not the case, in fact, each insurer's rates are unique to them so it's safe to say that no two are alike.
With insurance, you get what you pay for. A low price could very well mean that you will pay for a large chunk of a claim yourself.
Home insurance, for example, may be less expensive without accidental damage cover. However, you would not be protected in any number of common situations such as smashed windows.
I’m too young for life insurance
Younger people often believe that because of their age they don’t need insurance - this is where the problem lies. Securing life insurance is an essential part of financial planning.
Young parents may also think the same. However, as soon as you have someone who depends on you financially, you need life insurance.
The best time to get these types of policies is when you are young and healthy.
There will never be a time when you will be offered more attractive insurance rates - the older you get, the more expensive life insurance will become.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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