According to a poll conducted by CNBC, distinguishing financial truth from fiction can be challenging. To assist consumers, eight personal finance experts were consulted to identify the most prevalent money myths. Here are nine of the most significant misconceptions debunked by these financial authorities.
Myth 1 – Daily Coffee Sacrifice as a Major Financial Game-Changer
You might have heard the common belief that buying a daily cup of coffee could impede your ability to save for retirement. However, according to Douglas Boneparth, a certified financial planner and member of CNBC’s Advisor Council, individuals don’t have to be overly stringent with their spending habits to achieve financial success.
Boneparth, who is also the president and founder of Bone Fide Wealth, stated that giving up small expenses that bring happiness is not as crucial as making significant decisions such as choosing where to live or what car to drive. These choices have a more significant impact on financial outcomes than sacrificing a cup of coffee.
While every penny counts, Boneparth believes that depriving oneself of all joy is unnecessary. He suggests balancing discipline and consistency with enjoying life’s pleasures to achieve financial goals. Therefore, he advises people to assess their budget for discretionary expenses and prioritize their purchases accordingly.
Myth 2 – Car Dealerships May Not Offer the Best Financing Rates, Advocacy Group Warns
According to Erin Witte, director of consumer protection at the Consumer Federation of America, car buyers often assume that dealerships provide the best financing rates for their purchases. However, dealerships are often paid by lenders based on the interest rate charged, creating a conflict of interest that can result in higher rates for consumers. To save money on their car loans, Witte advises buyers to seek financing from their local credit union or bank instead.
Myth 3 – Not All Financial Advisors Are Fiduciaries, Warns Pioneer of ‘Life Planning’ Branch
George Kinder, who founded the “life planning” branch of financial advice, cautions that not all financial advisors are fiduciaries. While a fiduciary advisor is legally obligated to prioritize their clients’ economic and financial interests over their own, some financial intermediaries are not subject to this requirement. To ensure that you’re working with a fiduciary advisor, Kinder recommends asking about their fiduciary status before engaging their services.
Myth 4 – You must pay for frequent credit report access
John Ulzheimer, a credit expert who has worked for FICO and Equifax, notes that while it used to be true that consumers were entitled to one free credit report per year, this has changed during the Covid era. The credit bureaus have unlocked the AnnualCreditReport.com website, allowing consumers to access free copies of their credit reports on a weekly basis. As a result, there is no longer a need to purchase credit reports from other sources.