NEW YORK -- Steer clear of credit cards. Hoard cash for a big down payment on a home. Put off retirement savings until student loans are paid off.
New graduates and young professionals are often faced with a barrage of financial advice. The challenge is separating the bankable wisdom from the myths, particularly at a time when so many of the well-established rules have been upended.
Consider the many moving parts: Sweeping overhauls of credit cards and health insurance regulations were signed into law. And after suffering steep losses, retirement accounts are just now moving past where they stood at the peak of the market. The implications of such events can be difficult to process for those just starting their financial lives. But early decisions can dramatically alter futures.
"You want to sit down and plan, so you really have something to show for it down the road," says Greg Womack, a certified financial planner in Edmond, Okla.
To avoid regrets, don't buy into these five myths:
Myth 1. Nobody is hiring
The unemployment rate remains stubbornly high at 8.9 percent. The bleak headlines are discouraging for those looking for better jobs and the latest crop of May graduates.
Still, positions constantly open up as a result of turnover, even when a company has a hiring freeze. The key is to be prepared to capitalize on those opportunities.
Rather than post a résumé on general job sites, look to establish targeted connections. That could entail joining a professional or alumni association to start meeting the right people.
Even if those newfound contacts aren't in a position to hire, they can provide insight into an organization.
"Make yourself a known personality," says Eleta Jones, associate director of The Center for Professional Development at the University of Hartford. "So when a position does open up at a company, you're at the top of everyone's mind."
In February, companies added more workers than in any month in almost a year. It helped push down the unemployment rate a full percentage point in just three months -- the sharpest drop in a generation. Economists expect stronger hiring to continue.
Myth 2. Debit trumps credit
Credit cards get a lot of heat for burying consumers in debt. Young people in particular can run into trouble as they set up new apartments, buy clothes for work or spend to fill the gaps left by an entry-level paycheck.
Debit cards, meanwhile, are viewed as a way to control spending and stay on budget.
Yet when used responsibly, credit cards offer more advantages than debit cards. Users benefit from greater fraud protections and can earn valuable rewards for spending.
More importantly, those just starting out should understand the role credit cards play in building a strong credit history. That in turn lays the groundwork for when the time comes to buy a car or a home.
It's true that carrying too high a balance or missing payments can seriously damage credit histories. But once those pitfalls are in check, there are plenty of reasons to sign up for credit cards.
Besides, new regulations now protect consumers from many of the questionable practices that gave credit cards such a bad name. For example, issuers can't raise rates on existing balances or charge excessive penalty fees.
Myth 3. Health insurance is a waste
A higher percentage of 19- to 29-year-olds are uninsured than any other group, according to the Kaiser Family Foundation. That's in part because young adults are more likely to have jobs that don't offer benefits.
Under the healthcare overhaul, however, young adults can stay on parents' insurance until they're 26. It's an option worth taking advantage of even if it costs a little extra to stay on a parent's plan. Paying for coverage may seem like a waste, but a single medical incident could result in considerable debt.
And state regulations can provide even more generous benefits. Find provisions by state at bit.ly/9Sg5El.
Myth 4. You can save later
When paychecks are modest, it can be a struggle to keep up with rent, student loans and credit card bills. Retirement seems like such a low priority.
But saving early is more necessary than ever before.
Companies are scaling back benefits and putting more responsibility for saving on workers. Just 15 percent of private-sector workers have a pension plan that guarantees a steady payout during retirement, down from 39 percent in 1980, according to the Employee Benefit Research Institute.
So even if your paycheck is stretched thin, get a 401(k) if it's offered. Earning compound interest for decades on even a small monthly contribution will make a huge difference.
Automatic enrollment has increased 401(k) participation rates. But review the plan and contribution levels.
It may be wise to increase the amount withheld from paychecks. If an employer offers matching contributions, don't leave any money on the table.
Myth 5. You need a big down payment
It's a great time to buy a home, with the average rate on the 30-year fixed mortgage still below 5 percent. But young people who don't have substantial savings might assume that they can't take advantage.
Although lenders have tightened lending standards, there are still options for individuals who have a solid credit history and a steady income.
Anyone can apply for a loan from the Federal Housing Administration, which only requires a 3.5 percent down payment. Borrowers will also have to pay for mortgage insurance, but those added costs could easily be worth the value of buying in today's market.
"The economy has created a lot of hesitation about buying," says Greg Herb of the National Association of Realtors. "But in a few years, a lot of people are going to be looking back and saying, 'I wish I would've bought then.'"