20 Financial Myths You Should Stop Believing Today

In terms of handling their money, many people believe in wrong things about money that can lead them astray. Most of the time, these false beliefs come from out-of-date information, media portrayals, or just not knowing how money works. Let's examine 20 of the most popular financial myths and discuss why you should not believe them.

Tricia Quitales
January 29, 2025
6 min read

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There is too much false information about money management being spread. There are many false views about money that people hold, and believing in them can lead to making bad decisions. This article busts 20 common financial myths, ranging from false beliefs about credit scores to bad ideas about saving and spending. It will help you make better financial decisions. We need to bust these myths about money so that you can handle finances with confidence and understanding.

1. You need a high income to be wealthy.

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Many people think that only people who make a lot of money are wealthy. It’s not how much money you make; it’s how much you spare and put away. No matter how much money you make, you can get rich by handling it well.

2. Carrying debt is always bad.

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Not all debt is bad. When it comes to things like mortgages and business purchases, debt can be useful if used right. Taking care of it properly and investing in things that will gain worth over time are the most important things.

3. Renting is just throwing money away.

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If you’re not ready to settle down or can’t afford a home, renting may be a good way to save money. It can also give you freedom and keep you from having to pay for fixes you didn’t plan for. There are times when renting is cheaper than buying a home.

4. Credit cards are always bad.

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Using credit cards without planning can damage you, but they can also help you establish a good credit standing and provide rewards. The secret is to pay off your debt with high interest rates and avoid debt overall every month. If you know how to use credit cards, they will most surely help you save money.

5. You have to be rich to invest.

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You don’t need a lot of money to start spending. You can start investing in many different sites for as little as $1. You should begin early and keep your investments for a long time to get the most out of your investments.

6. You should always pay off your mortgage early.

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Paying off your mortgage early might not always be a good idea. Putting your extra money to work could earn you more than your mortgage interest rate, so it might be smarter to do that instead. Think about how much money you have before you make this choice.

7. Saving money in a savings account is the best way to grow wealth.

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Savings accounts are safe but don’t give you a significant return. For long-term wealth, you’ll need to put money into things like stocks and bonds. It’s more likely that your purchases will grow if you spread them out.

8. Financial planning is only for the wealthy.

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Planning your finances can help everyone, no matter how much money they make. It is all part of setting long-term goals, creating a budget, and saving money for situations. Planning for your money can help you get the most out of what you have.

9. All debt is bad for your credit score.

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Not all kinds of loans are bad for your credit. Paying your mortgage or car loan on time can help improve your credit score. Keeping a good payment past and being careful with how much credit you use is important.

10. You can’t retire without millions in the bank.

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You don’t need a lot of money to live well. You can retire on a lot less if you plan ahead, save regularly, and know what you need. A lot of people can live well on a lot less than what is usually said.

11. Your credit score is the most important factor in financial decisions.

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There are other things that are more important than your credit score. Lenders also look at your debts, income, and general financial health. It’s just as important to keep your finances in order as it is to have a good credit score.

12. You should always buy the cheapest option.

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It might save you money initially, but it might cost you more in the long run if you buy the cheapest choice. Value is more important than price. Sometimes, buying a better product that costs a little more can save you money in the long run.

13. You need to keep your emergency fund in a savings account.

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Having a savings account is safe, but the interest rates aren’t always great. You might get a better return on your emergency fund if you put it in a high-yield savings account or a money market account that you can still get to.

14. Your 401(k) is all you need for retirement.

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Your 401(k) might not be enough to get you through retirement on its own. To spread out your retirement savings, you should also think about other investment accounts, such as IRAs. More alternatives increase your chances of achieving your retirement targets.

15. Once you have kids, you can’t save for retirement.

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When you have kids, it’s easy to forget about saving for retirement, but this can be a big mistake. You can save for your future and your kids’ if you set priorities and stick to your budget. You can still retire even if your family grows.

16. Financial independence is for the privileged.

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Anyone can become financially independent if one has the correct mentality and strategy. Making good habits, saving wisely, and living below your means are all part of it. Over time, anyone can take steps to get rich and be financially free.

17. If you don’t have debt, you don’t need credit.

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Having good credit is important even if you don’t owe any money. A good credit standing can help you get better loan rates and make renting a flat or applying for a job easier. Even if you don’t have any debt, you should still keep an eye on and improve your credit.

18. Money can’t buy happiness

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Money alone won’t make you happy, but it can help by giving you security and freedom. Having enough money to meet your wants, follow your interests, and help others can make you happier. Having a lot of money isn’t important; what matters is how you spend it.

19. You should always follow financial advice from family and friends.

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Even if your family and friends mean well, the help they give you might not work for your specific financial situation. Getting advice from a professional that fits your specific wants is important. Making financial decisions is a personal matter, and getting advice from a professional can help you do it.

20. You have to take risks to make money.

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To get rich, you don’t always have to take chances. Having a savings account or buying low-risk bonds are safe and steady ways to build wealth. A balanced method can help you make money in the long run without taking on too many risks.