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Debt Is Bad, Daily Lattes, and Busting Money Myths

Money myths are pervasive, and they’re not all good advice. So go ahead and enjoy a $6 latte while we bust some of the worst offenders.

Myths and facts written on a chalkboard, money myths

While you may have learned a lot about money and finance in your education, the biggest influence on how you handle money comes from how you were reared.

For example, my family was on the lower socioeconomic tier. My dad was a truck driver, and my mom had minimum-wage jobs. So, money was always tight. But my mom—who handled our financial affairs—was a pretty good money manager. We didn’t have extra, but we always had a home, vehicles, and plenty of food.

But my parents were never able to save much money. And looking back, I know that while our family income was modest, had my parents been able to get past some of the money myths they inherited from their parents, they probably could have lived more securely in their retirement years. It’s a matter of changing how you think about money.

A 2022 Survey by GOBankingRates found that more than 25% of “Americans have never talked about money management with their parents.” And yet, COUNTRY Financial® found that 61% “of Americans consider parents a key influence in shaping the way they manage their finances.” That’s because we model our parents’ behavior unless we decide to do something differently.


And there is plenty of proof that when you do change your beliefs about money, you can radically improve your financial future. If you don’t believe me, just read my November 2022 magazine, The “Millionaire Mindset”: How to Think, Live and Invest for Success. You’ll find some great references with examples of folks who redefined their thinking about money and achieved great financial success.

So with that in mind, I wanted to share a few commonly held beliefs about finances, money myths as it were, that are desperately in need of busting.

3 Money Myths in Need of Busting

Money Myth #1: All Debt Is Bad

Not true. Borrowing money can be good, especially if it increases your net worth or enables you to make more money. For example, most of us will never be able to buy a home for cash; we need mortgage loans. Ditto with higher education. Or if you are the owner of a business, often expansion requires a loan.

The key is to be able to afford your debt and to keep it in a reasonable range. When I was in banking, a client came in with a request for a loan to pay off his credit cards. This was 30 years ago, and he earned about $44,000 a year—a good salary back then. But he owed $88,000 in credit cards. Yikes! At today’s average credit card rate of 18.9%, with a 4% minimum monthly payment, it would take him 21.2 years to pay that back!

The takeaway here is that debt can be good when used responsibly.

Money Myth #2: You Can Never Enjoy “Unnecessary” Things

Now, I do not advocate that you spend $6 daily on a fancy cup of coffee, but let’s get real. Sometimes, you just need an uplift to your day!

You can get crazy with penny-pinching. I once knew a woman who tracked every penny she spent (not a bad idea!) but also tracked how much money she saved by using coupons. Now, I love coupons myself. And while I never kept a spreadsheet of what I saved, I used to get a kick out of being in the grocery line, and finding out when my tab was added up, that I saved $20 or more—yes!

And today, it’s much easier—no need to clip coupons; they are mostly digital.

Additionally, eating out daily can rapidly add up; but once in a while, it’s fine. Since I work at home most of the time, I rarely eat lunch in a restaurant. Plus, I love to cook, so I always have leftovers.

But don’t beat yourself up over having a small indulgence once in a while; just be aware of how much you are spending and what you are buying. Budget in those fun mad-money expenditures!

Money Myth #3: You Need a Lot of Disposable Income to Invest

Nope. This money myth is also known as “I don’t make enough money to worry about planning, saving, or investing.” I’ve heard a lot of stories about why people don’t save or invest, and this is probably number one. It’s totally untrue. I remember when I had my first full-time job. I made $84 a week and saved $50 a month. That was about 14% of my pay. Of course, back then, I lived at home with my mom and dad, but even when I moved out, I saved regularly.

My point is this—if you budget wisely, and control your spending habits, you can save. And one of the best ways to do that is to take advantage of your employer’s 401(k) or if that’s not available, start your own savings/investing account, and pay yourself before you begin doling out money for other purposes. With those plans, you can begin investing with just a small part of your income each month. And as your income grows, add to that monthly amount. And if your employer matches funds, I recommend you invest the maximum amount. Why not take advantage of what is essentially “free” money?

Over time, those bits and pieces add up. Just saving $1,000 a year, starting at age 25, and using the average historical market return of 9%, by age 65, you will have accumulated $374,278. To get those figures, I used this calculator. I highly recommend you play around with it to see how saving can add up.

This post has been partially excerpted from the latest issue of Cabot Money Club Magazine, to see the full list of money myths, as well as some smart adages, subscribe today.


Nancy Zambell has spent 30 years educating and helping individual investors navigate the minefields of the financial industry. She has created and/or written numerous investment publications, including UnDiscovered Stocks, UnTapped Opportunities, and Nancy Zambell’s Buried Treasures under $10. Nancy has worked with for many years as an editor and interviewer for their on-site video studios.