Misconceptions about Money - mental_floss on YouTube (Ep. 41) | Mental Floss

Hi, I'm Elliot, and this is Mental Floss on YouTube

Today, I'm going to talk about some misconceptions about United States money and finance

Misconception number one, you have to be broke to declare bankruptcy. Filing for bankruptcy has a few requirements

but being broke is not one of them. If a person is unable to pay their bills, then they qualify

And after filing, many people are allowed to keep some property and funds. The actual amount varies from state to state

But the goal here is to give the person something to support themselves. Misconception number two, wills determine who gets someone's money after they die

Actually, beneficiaries override wills. This means that if someone shares joint accounts like bank accounts, saving bonds, or retirement

accounts with a person, that is the person who legally receives the money after a death

According to the Wall Street Journal, because these beneficiary designations override your will, they need to be carefully coordinated with your overall estate plan

Speaking of wills, misconception number three, you can inherit debt. Most of the time, debt is the estate's responsibility

So basically, the money and assets left after a person's death will be used to pay off debt

If there's not enough money there, the debt usually just goes away. It doesn't get passed on to someone else

And this is related to what I was just talking about. If you a beneficiary on someone account then that money goes to you not creditors But if not that money is put to the estate and can be used to pay off the deceased person debt Misconception number four you only have one credit score As you may know your credit score is a number that tells lenders how likely you are to repay loans or debts

What you may not know is that you have more than one credit score. Some believe that there is only one per person and it's determined by the government

But companies, known as credit reporting agencies or CRAs, actually provide credit scores

So if you request your FICO credit score, it might vary depending on which CRA you ask

There's also another type of credit score known as Vantage score, and different CRAs

will have different score systems too. Disconception number five, income affects credit score

Income will definitely be important to institutions that grant loans, but even if you're a billionaire

it won't factor into your credit score. Things that do affect your credit score include late credit card payments, maxed out credit

cards, and defaulting on loans. Misconception number six, elderly people live solely on Social Security

Altogether, Social Security makes up around 38% of the income of the elderly

As of 2014, the Social Security Administration claimed that among elderly Social Security

beneficiaries, 22% of married couples and about 47% of unmarried persons rely on Social

Security for 90% or more of their income. But this is not an ideal situation

In 2012, the average person living on Social Security received a mere $14,400 a year, which

was only about above the federal income poverty line Misconception number seven undocumented immigrants in the U don pay taxes In 2010 undocumented immigrants paid billion in state and local taxes

$2.2 billion of that came exclusively from undocumented immigrants in California. They pay many taxes at both the federal and state level, including income, property, and sales taxes

Misconception number eight, most products that Americans spend their money on are made in China

According to a 2010 study conducted by the Federal Reserve Bank of San Francisco

Chinese goods only make up 2.7% of personal consumption expenditures in the United States

So, where is everything coming from? Well, it turns out that 88.5% of the things we buy were made in the U.S

How about that? Misconception number 9. College costs more now than ever before

Actually, according to the College Board's annual survey of colleges, the cost of college

might be more manageable now than ever. Because as the cost rises, thanks to inflation, so do grants and scholarships

Factoring in grants and scholarships, the median annual cost of a private college in 1992 was $10,010

In 2014, it was $13,380. So, yes, the cost has risen, but it's not increasing at three times the rate of inflation, as some claim

It also depends on a family's means. Like, according to Bloomberg Business, wealthier families now pay more than ever to send their children to college

But for much of the middle class the real net cost of college has not changed significantly For much of the poor the expansion of aid has increased the accessibility and affordability of a college education Misconception number 10 money can or alternatively cannot buy happiness Okay so we usually don

mess with like philosophical questions here on Mental Floss, but there have been some interesting

studies on this, so we're going to talk about it. Many experts claim that money brings happiness to

a certain point. Then there's a drop-off. Like a 2010 study conducted by one economist and one

psychologist found that quote, beyond $75,000 money is important for life evaluation but does

nothing for happiness, enjoyment, sadness, or stress. Both factors are important. It's good to

have high emotional well-being but it's also good to think your life is going well. And research done

at the University of Pennsylvania and the University of Michigan examined the happiness of countries

compared with their per capita GDP. They found that richer people tended to be happier and they

did not observe the plateau at $75,000 that the other study did. So let's just see. Let's just all

make a lot of money and then see what happens. And if you're still sad, let me know. And I'll be like

I'm so sorry. I'll take all your money. If you have a topic for an upcoming misconceptions episode that you would like to see, leave it in the comments. Thank you for watching

misconceptions on mental flaws on YouTube. And I will see you next week