7 Money Myths That Keep You Broke
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Money advice is everywhere — blogs, YouTube videos, social media, and late-night conversations with friends. But not all advice is good advice. In fact, some of the most commonly shared financial “truths” are actually myths that could be holding you back from saving, investing, or getting ahead.
In this article, we’ll bust seven popular money myths that sound smart on the surface but can quietly sabotage your financial well-being if you follow them. Some might surprise you, others might be things you’ve heard your whole life — but by the end, you’ll be better equipped to make wiser financial decisions.
7 Money Myths That Keep You Broke
Let’s dive into the myths that may be costing you more than you think:
- “Buying is always better than renting.” Homeownership can be great, but it’s not always the right choice. Renting can offer flexibility, fewer maintenance costs, and in some cases, better value depending on where you live.
- “Credit cards are evil.” It’s not the card — it’s how you use it. When used wisely (and paid off monthly), credit cards can help build credit, earn rewards, and provide fraud protection.
- “You need a lot of money to start investing.” Thanks to apps and fractional shares, you can start investing with as little as $5. Waiting until you’re “rich” only delays the power of compound interest.
- “If I make more, I’ll save more.” Many people increase spending as income rises. Without a plan, more money often leads to lifestyle inflation, not savings growth.
- “Budgeting is too restrictive.” In reality, budgeting gives you control. It doesn’t mean you can’t have fun — it means you tell your money where to go, rather than wonder where it went.
- “Carrying a balance builds credit.” Nope. Paying off your card in full is what builds your score. Interest just costs you money. You don’t need debt to prove you’re responsible.
- “Cash is king.” Holding some cash is smart, but too much can lose value over time due to inflation. Diversifying savings and investing in assets can help your money grow.
Behind the Scenes
So where do these myths come from? Often, they’re handed down like financial folklore — advice repeated by well-meaning friends, relatives, or outdated school curriculums. Others are pushed by industries that benefit from misinformation, like the myth that carrying a card balance helps your credit (hint: credit card companies profit from this one).
Some myths stick around because they once held truth — buying a home used to be a surefire way to build wealth, but today’s volatile housing markets and changing lifestyles mean it’s not a one-size-fits-all strategy anymore.
What Most People Don’t Know
- Only 41% of Americans use a budget, despite research showing budgeting leads to higher financial confidence.
- You don’t need a perfect credit score — most lenders give top rates to those in the “very good” range (740+).
- Renters often save more in high-cost cities if they invest the difference instead of buying.
- Automatic savings — even small ones — increase your chance of sticking to a goal by over 70%.
From Experts & Explorers
Ramit Sethi, author of “I Will Teach You To Be Rich,” says: “The most dangerous money myths are the ones that sound logical. They give people a false sense of security or fear. The truth is, personal finance is more personal than finance.”
He encourages people to build systems that work for their lives, not just copy advice blindly. “One-size-fits-all rarely fits anyone,” he adds.
Bonus Fact
A study by the FINRA Investor Education Foundation found that financial literacy rates in the U.S. have actually dropped since 2009 — but people’s confidence in their financial knowledge has increased. Translation? Many of us are confidently clinging to bad information.
Takeaway
When it comes to money, assumptions can be expensive. The myths we believe often feel right because they’re familiar — but in the world of personal finance, that comfort can lead to missed opportunities and unnecessary debt.
The good news? Replacing myths with facts is a superpower. By questioning old advice, learning continuously, and tailoring your money plan to your real life, you’re already ahead of the curve — and on your way to building smarter wealth habits that last.
