Ten things you should never believe

You could be losing out if you believe any of the following...

When it comes to our finances we all have our own way of dealing with them. But there are some things about money you should never believe. Here are ten of them.

1. I should always get the cheapest insurance policy

Here at lovemoney.com we’re always telling you to shop around before you buy or apply for anything financial – whether it’s insurance, a credit card, or your gas and electricity – to ensure you’re getting the best deal.

However, when it comes to insurance, choosing the cheapest option won’t always work to your advantage. That’s because, whether it’s home insurance, travel insurance, or car insurance, choosing the cheapest option may mean you’re not covered for everything you need. Either that, or you may find you end up having to pay out a large excess should you need to make a claim.

So while saving money is obviously good, make sure you read the terms and conditions of the insurance deal carefully before signing up.

2. I’m too young to start investing in a pension

You’re never too young! The earlier you start investing in a pension, the more money you’ll have in retirement. Starting early means your investments have many more years in which to grow than they would do if you were making contributions closer to your retirement.

Related how-to guide

Start a pension

We all need to consider how we’re going to pay for our lifestyle in retirement. Follow these simple tips for how to get started.

See the guide

If you’re unsure where to start, have a read of our Become a pensions expert in five days series and take a look at our pensions archive.

3. I don’t need life insurance

OK, so technically not everyone needs life insurance. However, if you have dependents, you do need it – no arguments.

If you do have dependents – most probably children – you need to think about what would happen if the worst happened to you. Would your family cope financially and would your partner be able to keep up with the mortgage repayments?

To ensure they will be financially secure, you need to take out life insurance. And the best news is, life insurance isn’t expensive – in fact you can pick up a policy from as little as £5. Find out more in The most important reason to take out life insurance.

4. I don’t need to make a Will until I’m old

Similarly, don’t automatically assume you don’t need a Will. Unless you have particularly accurate psychic powers, you may struggle to work out exactly when you’ll pop your clogs. And as a result, if you have dependents, it’s important you have a Will in place.

If you die without making one, the law will decide what will happen to your estate and this could leave your loved ones in the middle of a financial nightmare. What’s more, if you’re not married, your partner could be left with absolutely nothing.

Related how-to guide

Write a will

Find out why you need to make a will and how to do it.

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You can find some tips about writing a Will in Watch out for this Wills scam.

5. I can’t afford to save

This is very easy to believe, particularly given the cost of living is so high and money is tight for many of us.

However, saving really is a good habit to get into. So if you’re struggling, consider drawing up a budget and making some cutbacks. Take a look at our how to guide: How to build up your savings as well as Five ways to increase your savings for some tips.

Even if you can only afford to put aside £40 or £50 a month, it’s still well worth doing. For some tips on where to put your savings, take a look at 3pm on a Tuesday is the time to save.

6. My credit card is great for every day spending

Spending on a credit card can have its benefits. But if you’re relying on your credit card for every day spending and using it to pay off your mortgage and your household bills, and you're not paying off the balance each month, your debts will soon build up and put more strain on your finances.

If you’re having difficulties managing your money, take a look at the next point.

7. No one can help me get out of debt

Many people who are struggling with their finances tend to bury their head in the sand and believe there’s no one out there to help them. This simply isn’t true. There are plenty of places you can turn to for completely free debt advice, including the Consumer Credit Counselling Service, Citizens Advice and The National Debtline.

These places will be able to help you to find a way out of your debt problems. To find out more, have a read of Get debt advice for free.

8. Opening my post is a waste of time

It’s easy to think that opening your post is a waste of time but it’s not! OK, so nobody particularly enjoys opening bill after bill, but if you don’t open your post you could be missing out on some very important information.

This could be interest rate changes on your accounts, fees you’re being charged or new benefits you could be receiving. So don’t simply throw away your post without reading it! Find out more in The dangers of ignoring your post.

9. My overdraft is extra spending money

We’ve all been there – payday seems very far away and yet you’ve got all that overdraft money sitting there waiting to be used. However, your overdraft should not be treated as extra spending money and should only be used in real emergencies.

If you do need to use an overdraft, make sure you use an interest-free one. The Santander Preferred Current Account offers an interest-free overdraft for 12 months. What’s more, you’ll also receive £100 cashback when you switch over and have at least two direct debits set up on the account.

You can find out more in Six cracking current accounts. And if you’re trying to get rid of your overdraft, read Three ways to get rid of your overdraft for good.

10. My bank will reward my loyalty

So many of us think that if we stay loyal to our bank, it’ll reward us. However, in many cases, the exact opposite is true and the best deals will be offered to new customers.

So if you’ve been with the same bank for years, it may be time to have a shop around and see whether there’s a better deal for your current account/credit card/savings account and so on.

This also applies to insurance companies. So when your home insurance or car insurance policy is next up for renewal, don’t simply accept the deal you’re being offered by your current insurer. Shop around and see whether there’s a cheaper deal elsewhere – because chances are, there will be!

More: Get a great current account | 3pm on a Tuesday is the time to save | Don’t get bullied into the wrong insurance