Myth: The less debt you have, the better your credit report
The better idea: Open a no-fee credit card and charge only what you can pay off each month. Or take out a car loan and stay on top of your payments.
Myth: Always pay yourself first
The better idea: Pay off your credit-card balances as fast as you can afford to, starting with your higher-interest cards first. (Here are four really bad credit cards to avoid.) Once they're back to zero, any money saving expert will tell you to apply that monthly payment amount to your savings, and then buy the things you want or need with cash.
Myth: All debt is bad
Every money saving expert agrees that education loans are "good debt." In 2015, college graduates earned 56 percent more, on average, than high-school graduates over their lifetimes, the biggest disparity ever, according to the Economic Policy Institute.
The better idea: If you think of interest as the cost of money over time, it becomes easier to evaluate the merits of different kinds of borrowing. A college degree puts more money in your pocket over your entire 40-year career. Does that new sweater increase in value, or make you a better person? Do you really want to be making payments on it a year from now?
Myth: Coupons and other grocery strategies are great money saving tips
How much is your time worth? Do you want to spend an hour or two of it every weekend cutting, sorting, and filing coupons, comparing the best prices around town, and driving to different stores?
Are these the products you really want to buy? Are they the best deals? Even with a coupon and a sale, the nationally advertised brand of frozen pizza may cost more than the store brand—and they probably come out of the same factory.
The better idea: Your favorite supermarket probably has a loyalty program that will give you the best available price, track your purchases, and deliver coupons (by mail or to your phone) on the things you buy frequently. That's how to save money at the grocery store. By the way, here are 13 things you need to know about those online deals sites.
Myth: Your credit history is confidential
In other words, the people looking at your financial business may include your boss, your social worker, or your ex-spouse, if they're entitled to court-ordered spousal or child support. Crooks and hackers do, too; check out this list of things to do in the wake of a data breach in 2017 at the Equifax credit reporting service.
Unfortunately, according to Margaret Reiter and Robin Leonard, authors of Credit Repair (Nolo Press), "It's not always easy to find out if someone who should not have access to your credit report has requested and received one anyway." You can check who has pulled a credit check on you by looking for unfamiliar names or businesses on the list of inquiries included in your credit report. If someone has accessed your credit history illegally, you can take legal action under the Fair Credit Reporting Act.
The better idea: Apply for a credit freeze with all three reporting agencies, which keeps unauthorized entities from looking at your credit report or opening accounts in your name. Details are at FTC.gov.
Myth: Student loans in deferment don't affect your credit rating
The better idea: Even if you're in deferment, make at least a small payment on your student loans. Depending on the terms of your loans, you may be accruing interest even if you're not currently required to make principal payments. Take a look at financial management tips for recent grads. How to save money on student loan debt: Apply for every scholarship and grant you can, try not to use student loans for living expenses, and definitely resist the temptation to max out your loan amounts to pay for spring break.
Myth: Investing is only for the wealthy and experienced
The better idea: Open an account at one of the discount brokerages, like Charles Schwab or Ally (here's NerdWallet.com's list of the best discount brokers). These companies specialize in guiding rookie investors through the process of opening accounts and choosing investments, and their sites are loaded with free research, calculators, and other tools.
Myth: Everybody needs a budget
Many of us are not a fan of spreadsheets and spending limits. If that's you, don't beat yourself up over it. Author David Bach told Business Insider, "People will try and go on a budget and then after two or three months, they lose their mind, they hate it." Like any other program—a weight-loss diet or solemn vow to make it to the gym every day—if you feel compelled to follow a budget, you'll resent it and stop doing it, and then feel like a failure.
The better idea: Track your spending and saving with a desktop app like Quicken, free online money-management tool like Mint, or a spreadsheet with your favorite categories. The apps let you link your accounts so transactions load automatically, saving you hours of typing. As long as you know where your money goes, and what your usual spending patterns are, you can spot a problem or adjust your spending to cover a shortfall.