11 Surprisingly Common Student Money Misconceptions

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Brian Page of HRBlockDollarsandSense.com shares some common misconceptions that young people have about money and great tips to dispel them.

Only 7% of high school students are financially literate. Fewer than 30% of adults report being offered financial education at school, college or the workplace. With limited places to turn for sound advice, many students have developed money misconceptions. Here are the 11 most common money misconceptions I’ve observed.

1. I will never be a millionaire. Most students do not believe it is very likely they will someday be millionaires. However, some quick math using a compound interest calculator reveals that a recent high school graduate who invests $7.50 a day in the market until age 65 would be a millionaire, assuming a return of the market average of 7%.

2. I can save what is left over at the end of the month. Research has found otherwise. Those who save first by making automatic savings deposits right from their paycheck save four times more than those who only deposit directly into one account.

3. College is unaffordable. Most teens are well aware of the surge in college costs. Many, however, don’t realize that by comparison shopping, seeking financial aid by completing the FAFSA and looking at alternative pathways to earning a degree, college costs can be made more manageable.

4. All debt is bad. Borrowing now to improve your future self can be a good idea. Affordable mortgages and student loans not exceeding your first year’s anticipated income make sense for most everyday Americans.

5. I should not file a tax return. Many students who file tax returns will be able to get a refund of some or all of the taxes that they paid on their income. H&R Block provides free filing support for certain tax filers.

6. The ongoing expense of an automobile isn’t much. Using the True Cost to Own calculator, students can explore cars they’re interested in and discover additional costs such as insurance, gas and depreciation.

7. My credit report is free at freecreditreport.com. The catchy freecreditreport.com commercials are often the only exposure students have had to credit reports. No, it’s not free there. However, once a year through each of the three credit reporting agencies they can access their credit reports for free at annualcreditreport.com.

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