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We all like to think that we will do our best when it comes to our finances. We think we save money, but we have never really sat down and done the math. You might be surprised if you did.
Here are the top five myths of saving money, we fall for:
First Savings accounts save us money
With money in a savings account for emergencies is a good idea. It is easy to reach, but not too simple. But if you look to save money or make your money will work for you, an old-fashioned savings account is not necessarily the best way to go. First you have to what you are looking to the payment of interest. For example, if you have a student loan with an interest rate of 5% and 3% have a savings account interest rate, your savings will cost you about 2%. You would be better off paying off that student loan using your savings account.
It goes the other way. If your debt has a lower interest rate than your savings, your money will work better in the savings. But with today's interest rates so low, your debt is likely to be higher than the amount of interest can be earned on a savings account. This means you are actually losing money.
Second Sales shopping saves money
I used to be a shopaholic, and sales were my drug of choice. Let me tell you that you do not always save money. Yes, if you really need the item, then you will save money. But marketing often purchase items that would not normally be purchased can lead. And you usually buy twice as much as it is on offer. So you have no money saved.
Then you should never the point, you have actually wasted money. This may also apply to low-cost goods and shops in the ground. It does not matter if you bought your daughter's 35 pairs of shoes at flea markets for $ 1 each. When she was only wearing two pairs of them, you just wasted $ 33.
Third Refinancing your home pays off
If you refinance your home, you will not necessarily save as much money in the long run. Yes, that's your monthly payments are smaller, but you have refinanced for another 30-year term. This means that if you have already paid 10 year mortgage, then refinance for another 30, you have basically extended your loan to a 40-year mortgage. Sit and do the math and you'll see when you really save is, all the rest.
If you really want to save money to refinance for a lower price and a shorter period. Your monthly payment may not go down, but your entire refund can.
4th Zero percent interest rate saves you money
If you take a card with a zero-percent repayment term, you are not saving money. You are only delaying the payment for goods. You do not need to save and not spend more money. But if you do not pay the money back to the zero-percent period, you will be paying interest on this product. This costs you money.
5th Savings depends on income
No matter how much you make, you can save money. You only need to spend less than you. If you make more money and more money to spend, you are not saving anything. In fact, you could spend even more money. Do not wait until you get more money, need to start saving. You have to start now.