Please ensure Javascript is enabled for purposes of website accessibility

Money Myths: The Good, the Bad & the Ugly

Most of us never take practical economics classes that dive into everyday finances, how to save, how to invest, or how to plan for the future. If you’ve taken an economics class at all, you probably learned more about supply and demand than you did about setting aside an emergency fund. That means that most of what we “know” about money we learned from our parents or just sort of picked up as we went along. So this month, let’s put to rest some of the most pernicious money myths and unfounded beliefs that keep us from achieving our long-term financial goals.

Sparklers and Champagne Glasses

Happy New Year! I bet you’ve already made your 2024 resolutions. I know I have, and I’m already beating myself up for not completing the ones I made last year! But, you know, I’m in good company, as researchers say that 91% of us don’t keep our New Year resolutions. So, don’t feel too bad if you are a member of my well-populated group!

Thinking about these hopes and promises for the new year made me start ruminating on why people don’t keep their resolutions. And here’s what a study by my alma mater, Ohio State University, said about the reasons that 23% of us quit our resolution by the end of the first week of the year and 43% quit by the end of January:

  • Goals should start at a time of change or need for change, instead of just by tradition. Otherwise, you won’t be motivated.
  • Expect obstacles. We often give up at the first sign of opposition. Consequently, it’s important to plan for trials along the way.
  • Set goals into challenging, measured but smaller chunks. After all, as they say, “Rome wasn’t built in a day.”
  • Accountability. Having a partner in crime to help keep you focused is critical.

I believe, wholeheartedly, in those four conclusions. However, I also think we should add one more: People often believe in myths that can stymie or totally defeat their goals, especially their financial aspirations.

And that’s what I want to talk with you about today, because time and time again I’ve seen these unproven beliefs about money just totally destroy my friends’ and family’s ability to achieve long-term financial security.

So, let’s talk about some of them.

You Can Blame Your Parents for Your Money Beliefs (But Not Forever!)

First, you need to think about this—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 refined their thinking about money and achieved great financial success.

So, let’s start simply and try to unwind some of the money myths that have created barriers to your financial health.

The “Bad & Ugly” Money Myths

Myth 1: It’s rude to talk about money. If you are one of the quarter of the population whose parents didn’t discuss money with you, you may believe this. However, it really is okay to discuss money. And if you have children or a spouse, that should be a priority. Statistics show that 20%-40% of marriages fail due to disagreements about money.

I see this all the time. In my real estate business, I’m constantly amazed at the number of couples who disagree about how much money they should spend on a home. Friends have disagreed over sending their children to in-state or out-of-state colleges due to different opinions on how much money should be allocated to their children’s educations. Listen, these are huge expenses, but money disagreements begin with the little things, such as how much one partner spends on clothes, groceries, or gifts. It’s imperative that you discuss money.

And it’s critical that your spouse and children are included in saving/investing talks as well as expense discussions. These discussions can be great forums for exchanging ideas and goals.

But also know that there are certain money aspects you may not want to share with others. For instance, discussing your salary with your coworkers is a surefire way to create enmity and chaos. You know, life isn’t always fair. And neither are salaries. In a Forbes survey in 2022, women still made $0.82 for every dollar men earned. And the Bureau of Labor and Statistics (BLS) reports that median weekly earnings were $758 for Hispanics, $794 for Blacks, $1,003 for Whites, and $1,310 for Asians.

And even if your employer is fair, there may still be a discrepancy between what you and your co-worker (who you think has the same job as you) earn. Many factors go into an individual’s earnings, including how well you negotiate. So, save yourself some angst, and if you have an issue with your earnings, I suggest you talk about it with your manager and not your co-worker.

Myth #2: 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!

Myth #3: You should save a percentage of every paycheck. In theory, this sounds good, doesn’t it? But if you save a constant percentage of your income every month for the rest of your life, you’re probably not going to save enough. After all, your income should steadily grow. And certainly, your expenses will also. However, you should have more disposable income as you grow older, and should therefore be able to save a higher percentage of your earnings.

The important point here is to save consistently and to grow those savings over time. That requires some sort of budget where you can regularly track your income and expenses, so you can immediately portion out the extra income for saving and investing.

But there are certain circumstances when you may not be able to save an increasing portion of your income. From time to time, you will most likely have unexpected expenses that arise (like too much money spent on Christmas gifts or a wedding!) that will require you to allocate your monthly savings. And that’s fine; just make sure that next month, you are back to your regular savings plan.

Myth #4: It’s irresponsible to spend money on “unnecessary” things, such as a Starbucks coffee every day. 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!

Myth #5: My partner manages the finances, so I don’t need to know about money. This relates to #1 but is especially important for spouses. When I was in banking, I lost count of the number of recent widows who came in to ask me: 1) Do I have an account at your bank; and 2) Can you recommend a financial advisor?

It’s a disgrace to leave your spouse without any knowledge of your finances. Even if your spouse doesn’t want to be involved with your daily financial decisions, make sure he or she has knowledge of all of your assets and accounts. To do otherwise creates a host of problems, with the worst one being that your surviving spouse is probably going to fall into the hands of some unscrupulous money manager. Do not do this to your loved one!

Myth #6: Only wealthy people need financial education or planning. Not true at all. I refer you back to my November 2022 magazine. The examples cited in the Millionaire and Rich Dad… books are all folks who began with modest incomes but learned the value of saving and investing and followed a disciplined financial plan to work toward their goals.

And while there are many financial advisors that have pretty hefty asset requirements before you can sign on as a client, there are loads of good advisors that will help you. They will charge fees (percentage of your assets), as well as flat rates, depending on which services you require.

Myth #7: Financial “advice” always has your best interests at heart. Unfortunately, this is not always true. If your advisor is a fiduciary, he is bound by legal duty to operate with “your best interests at heart.” But not all financial advisors are fiduciaries. You need to read the fine print and also ask for references. And you can research them here.

Myth #8: You need to have a lot of extra money to plan for college or retirement, or even a vacation. Like any financial goal, this requires baby steps. That means determining what your money goal is and setting aside a bit each month to reach that goal.

Myth #9: You need to have significant disposable income to make investments. Nope. This 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. Here’s the calculator I use:

Myth #10: Investing is risky. Sure, we’ve all heard stories of folks who have lost money in the stock market, and it’s true that investing does come with some risk. But there are many ways to moderate that risk by using a planned diversified investing strategy. And importantly, to really grow your wealth, you will need to take some risks. Fortunately, the average return—even if you just invest in an index of stocks, such as the S&P 500, is about 9% per year. And that’s a whole lot better than the average 0.58% that a bank savings account pays today. By judiciously investing in fundamentally strong stocks, you can grow your assets much, much faster.

Myth #11: You need to monitor the stock market daily. No, you don’t, unless you are a trader. But if you are a long-term investor, I suggest looking at your portfolio at least monthly, but also set alerts on your investments, just in case something in one of your securities changes rapidly. And, of course, I wholeheartedly believe in setting price targets and stop-losses.

If you worry yourself to death about every 25-cent change in your stocks, you’ll drive yourself nuts! Instead, buy fundamentally strong investments and keep monthly tabs on them.

Myth #12: I’m too young to think about retirement. I know that at age 25, retirement seems a long way off. And it is. But the years do have a habit of sneaking up on you, and before you know it, your golden years are here.

So, three things: 1) You need to start putting money away early, so you don’t have to worry about how you will live in retirement. 2) The earlier you start to save and invest, the earlier your money will grow, as every deposit and interest/appreciation/dividends you receive will grow simply by the compounding effect. 3) If your employer offers a retirement program like a 401(k), in which they match a certain amount of your contribution, take advantage of it as soon as it’s offered. If you don’t have access to an employer retirement program, start your own via an IRA.

Here are some examples from JPMorgan of how starting to save/invest at an early age can really boost your financial assets.

1-24 Compounding for Retirement.jpg

Now, the following chart shows you the benefit of beginning to invest at age 25 versus starting at 35 years old. You see what I’m saying?

1-24 age 25 vs 35, retirement.jpg

Source: Business Insider

Myth #13: It’s too late to save for retirement. No, it’s not. The average life expectancy in this country for men is 73.2 years and 79.1 for women. Certainly, it’s not ideal to begin saving at age 50, but you can still pack away a lot of savings in your later years. Let’s say you begin investing at age 50, in the S&P 500. You start your account with $5,000, then add $2,000 per year. If you retire at age 65, you’ll have accumulated $79,698, based on the historical market return of 9% annually.

You can use this calculator if you want to fiddle around with it.

Myth #14: You don’t need an emergency fund. Sure, you do. A recent survey from CNBC reports that 61% of Americans live paycheck to paycheck. And I don’t mean to strike fear in your hearts, but a news program I watched just this morning said that our homeless population has grown more than 12%. And not all of the homeless are mentally ill; many are people who have just fallen on hard times, maybe a paycheck away from securing a home.

Most money experts believe you should have three to six months of your expenses tucked away into your emergency fund. This fund can cover you if you suddenly find yourself out of work, or can easily be used for unexpected medical bills, car repairs, or other unanticipated expenses.

Here’s a good source for helping you calculate your emergency fund.

Many people don’t see the need for an emergency fund, thinking that their credit cards or savings accounts are the best go-to in a pinch. However, these can increase your debt burden or put your financial security at risk in other ways. Creating and building a dedicated emergency fund, however, can lessen the impact of an unplanned expense on your finances and protect your savings. It’s well worth learning more about how to start one on virtually any budget.

Myth #15: Scholarships, financial aid, and a post-college job will pay for college. Hardly. Outlier says that just 1% of students receive full scholarships and just 25% receive $5,000 to $10,000 annually. Keep in mind that the average 2021-2022 annual tuition for public, four-year colleges was $10,740 for state residents, and $27,560 for out-of-state residents, according to CollegeBoard.

Consequently, you need to start saving for college now. Fortunately, there are lots of plans available. The top two seem to be the 529 Plans and Education Savings Accounts (ESAs). For more information, please see nerdwallet’s article on 529 plans and this article on

Myth #16: Your credit score isn’t important. Well, one day you might want to buy a car or home. If you haven’t built up your credit, banks and lenders will not lend to you, or will make you a loan at a much higher rate than you could get if you had a history of good credit use.

Just look at this example of mortgage rates vs. credit scores from Business Insider:

FICO ScoreNational average mortgage APR
620 to 6390.08314
640 to 6590.07768
660 to 6790.07338
680 to 6990.07124
700 to 7590.06947
760 to 8500.06725

From highest to lowest credit score, the rate changes by 1.589%. Over the 30 years of a typical mortgage loan, that differentiation will add up to a lot of money that you could have saved.

Additionally, your car insurance rate will depend on your credit score; a low score may block you from getting the job you want or even renting an apartment.

Myth #17: You only have one credit score. Nope. The three major credit reporting agencies are TransUnion, Equifax, and Experian. Additionally, many banks use their own formulas to score your creditworthiness. Your score may be similar from all sources, or it may differ. It’s a good idea to keep up with your credit score. I know a couple of my credit cards send me monthly updates—for free.

Myth #18: Carrying credit card balances will boost your credit score. Not really. The three credit bureaus TransUnion, Equifax, and Experian, actually calculate your credit score using a credit utilization ratio, which divides the amount of debt you carry by the amount of your total credit limit. So, the smaller the debt you have outstanding, relative to your total available credit, will lead to a higher credit score. And vice versa. If you don’t have much available credit left, your score will be lower, and it will be harder to get additional credit.

Myth #19: You must pay for frequent credit report access. No. Before Covid, the Fair Credit Reporting Act allowed us the right to one free credit report every 12 months. But since Covid,

you can access the credit bureau sites and get your credit report for free.

Myth #20: Debit is ALWAYS better than credit. Using credit cards is not a bad thing. If used wisely, they can help you build your credit score for larger purchases. And, many cards today come with rewards, such as airline miles, gas discounts, cash back, gift cards, and other benefits.

I mainly use one card for business and one for personal. My personal card racks up rewards that I mostly use to buy items at Lowe’s or Home Depot, and to make sure I can have easy returns if the products don’t suit me. And I often use my business card rewards for travel discounts and travel insurance protection.

You just want to make sure that you keep your purchases in line so that you can pay them off when the bill arrives. With an almost 19% average credit card rate today, you do not want to pay accumulated interest!

Myth #21: Credit cards will get me through any financial crisis. While that may be true, depending on credit cards in a financial emergency will likely push you into debt that is almost impossible to eliminate. With the highest interest rates of all debt, plus the temptation to make only the minimum payment, you will end up spending much more than your original crisis debt.

I’ve listened to many people telling me that they want to start a business using credit card advances. Of all of those people—more than 20—I only know of one person who was able to make his business successful and eventually pay back that debt. There are other means to overcoming a financial crisis. Of course, having an emergency fund would be number one. After that, friends and family, monies set aside for retirement or education, your home equity, and as a next-to-last resort (before credit cards), a financial institution that may make you a personal loan. But be prepared to pay some pretty high rates for that last option, too.

Myth #22: Buy a home at all costs. As a Realtor, of course, I’m supposed to think everyone needs to own a home. But that’s just not true. If you move around a lot or just don’t want to be burdened with the maintenance of a home, maybe renting is the right choice for you.

And home ownership comes with a lot of expenses—mortgage, HOA, taxes, insurance, and maintenance. The chart below from gives you a good idea of just what you can expect to spend as a homeowner.

Costs of being a homeowner
Look at the list of one-time and ongoing costs of being a homeowner, based on national averages.

Costs of being a homeowner.
One-time costsOngoing costs
Down payment: 3% to 20% of home priceMortgage payment: Varies
Appraisal fee: $300 to $2,000Property tax: ~$2,471/year
Inspection fee: $281 to $402Homeowner’s insurance: ~$1,428/year
Closing costs: 2% to 5% of home pricePrivate mortgage insurance: Varies
Homeowner’s association dues: ~$191/month
Maintenance: At least 1% of the property’s value annually
Utilities: ~$2,060/year

The national homeownership rate is currently around 65.5%, as you can see in the graph below.

1-24 Home ownership.png

The rate rose to the almost-70% level prior to the 2007 recession, due to way-too-easy credit, and then fell precipitously as foreclosures rose. I traveled to Las Vegas in early 2007 for a conference, and when my limo driver told me he was flipping houses, I knew the housing market was in for it!

If you want to and can afford to buy a home, that’s great, but home ownership is really not for everyone

Myth #23: Paying off your mortgage early isn’t worth it. That depends. Conventional advice used to be that you would see the highest return with your extra money. For example, if you have a 2% mortgage, and figure you can make 10% a year in the stock market, it would make sense to keep paying the 2% and invest the money you would use to pay off your mortgage in the market and earn 10%. On the other hand, if you are paying a 12% mortgage rate (which will probably happen again someday), and you can earn only 10% in the market, just pay off your mortgage.

The problem with thinking about this strategically is that paying off a mortgage also has an emotional component. The security you may feel by not having a mortgage payment may be worth more to you than earning a few more percentage points on your money. Additionally, if you think your income will be greatly reduced in retirement, the security of having a place to live may become even more important to you.

Myth #24: I have enough money; I don’t need to budget. I understand; you make a lot of money; you buy what you want, so why do you need to budget? Let me tell you; I have known a lot of people who have made fabulous money, but who have also racked up huge amounts of debt because they have bad spending habits and don’t keep control of their money.

In fact, my real estate firm is working with buyers right now who have this problem. They own a $1 million-plus home with no mortgage and a $365,000 second home with no mortgage. But they have accumulated an amazing amount of credit card, automobile, and business debt. They want to buy a home in our area for around $600,000 but don’t want to sell their other homes until they contract to purchase this new home. Unfortunately, although they have a lot of assets, they can’t get a mortgage loan due to their debt.

A budget doesn’t have to be complex. But just having one will force you to know what you are spending your money on, and I guarantee you, you will find expenses for things you don’t need (like all those subscriptions)!

Myth #25: There’s no way of knowing how much money I’ll need in retirement. There have been legions of studies done on this very question, and most experts agree that you’ll probably need some 80% of your pre-retirement income in your golden years. It all depends, of course, on your lifestyle. The rule of thumb, according to Fidelity is this:
Aim to save at least 15% of your pre-tax income every year—including employer contributions.

Fidelity suggests that you track your savings progress as follows: Aim to have saved at least 1x (times) your income at 30, 3x at 40, 7x at 55, and 10x at 67

Myth #26: Precious metals are always a good investment. While I am a fan of having gold in a portfolio—for hedging purposes—I don’t trade gold. You can buy gold in a lot of ways—the metal itself, coins, ETFs, etc. But metals prices can be very volatile; As you can see in the chart below, gold prices peaked at $2,675.95 in January 1980, fell to $452.19 by April 2001, and last month rose to $2,001.44. The average investor probably doesn’t really need to hold a big portion of metals in his or her portfolio.


Myth #27: Auto dealers give you the best rate on a loan. That depends on whether the dealership is offering special promotions for financing. This chart from USAA compares the two options:

Screenshot 2023-12-20 at 10.14.55 AM.png

Myth #28: I heard I should always buy credit life insurance when I finance something. Maybe. Credit life insurance is a type of life insurance policy in which the death benefit is paid directly to the creditor to pay off all or part of your debt when you die. You’ll often be asked if you want this when you borrow money to buy consumer products, such as furniture or an automobile.

Sounds good, right? But credit life insurance is expensive, and you may already have funds and/or a life insurance policy that you use to pay off these loans if you die. One instance when it may be beneficial to purchase credit life insurance is if you have a co-signer on the loan. That way, if you die, he or she will not have to make payments.

Myth #29: I have savings, so I don’t need long-term care insurance or life insurance. It depends. Will your savings cover the costs to educate your children and enable your spouse to maintain the same standard of living if you die?

And did you know that the average cost of long-term care in this country is between $4,000 (assisted living) and $9,000 (nursing home) a month? Will your funds cover that for you and your spouse? Long-term care insurance rates vary by state and age, but the American Association for Long-term Care Insurance (AALCI) says it averages $1,200 a year for a 60-year-old man for $165,000 coverage, and for a 60-year-old woman, it’s $1,960 for the same coverage.

Myth #30: There are just some things you can’t negotiate. Not really. You know that salaries are mostly negotiable (especially at the beginning of your career), but so are:

  • Rent
  • Gym membership
  • Medical bills
  • Attorney fees
  • Furniture
  • Cable, satellite radio, cell phone bills
  • Home repairs
  • Vehicles
  • Houses
  • Credit card rates and fees.

I’ve even negotiated clothing—a missing button, a seam tear, or a small stain—can get you a discount!

The “Good” Money Myths

I’ll end this article by sharing with you some good adages (not myths) about money.

  • Never spend money before you have it.
  • Spending is quick; earning is slow.
  • “A fool and his money are soon parted,” – Dr. John Bridges
  • “Creditors have better memories than debtors,” – Ben Franklin
  • “Rather go to bed supperless than rise in debt,” – Ben Franklin
  • If you buy what you don’t need, you steal from yourself.
  • “Save for a rainy day,” – Aesop.
  • “A penny saved is a penny earned,” – George Herbert
  • Interest on debt grows without rain.
  • Lend your money and lose your friend.

There you have it. I hope that breaking down these myths will help you create and maintain a healthy and strategic plan for saving and investing—one that will allow you to take vacations, indulge in your hobbies, educate your children/grandchildren, and provide for a happy retirement.