A money myth is a piece of information that a person believes about finances and money. A money myth may be true or untrue, like any other type of misinformation.
The most common examples are myths about how to obtain more wealth – the so-called get rich quick schemes. These include chasing lottery tickets, running an email scam, selling kitchen appliances on eBay, etc.
However, there are many “money myths” which are actually just an incomplete knowledge of finance and personal growth in general – for instance: choosing the major that will lead to the highest yearly salary or doing whatever it takes to become famous ASAP without considering whether fame is really what you want in your life or not (and if yes – at what price).
For another example: people who think that they have to live in a world of luxury and splendor for their entire lives, giving up on saving money and investing.
These “money myths” are not necessarily wrong because they can be true in some circumstances. However, most of them are just silly misconceptions, misunderstandings of reality or plain ignorance about finance management (which is more than understandable – it’s human nature to be ignorant sometimes).
The best way how to deal with these myths is simply to learn what’s the truth behind them. The more you know how things really work, the better decisions you’ll make regarding health overall – financial and otherwise.
So Let’s Take a Look at the 84 Most Common Money Myths Today!
1) Money Myths: people who won a lottery are rich
Reality check: most of them went broke soon after winning – some even faster than that. Why?
1) They don’t have any budgeting skills. Some lottery winners say that the only thing they knew was how to play the lotto and nothing else about money management at all.
These people never actually learned how to save for retirement, or what is a credit card or why it’s bad (or good) to use it, etc. They spend their winnings like there’s no tomorrow, having no idea where the money will come from next month – thus ending up in severe debt very fast.
2) Losing perspective on life in general. Winning millions can become a real obstacle in developing good personal growth and taking care of your mental health. You can find yourself struggling with various addictions, or becoming so obsessed about money that you lose interest in everything else.
2) Myth: the rich are getting richer
Reality check: The top 1% has 3 times more wealth than 50% of the population combined. That means if someone makes $100,000 per year now and is making $300,000 next year – it doesn’t mean he’s joined “the elite”.
It just means he made this extra amount from his efforts and skills as a type-A personality which resulted in higher income (assuming no illegal activities are involved). Note also that only half of the American households have retirement savings (see how to manage your money wisely ).
3) Myth: credit cards are the fastest way how to get rich
Reality check: having a credit card and being able to pay all of your expenses is not enough – you also need to have an actual income. Without it, using credit cards for daily consumption will just keep you poor and in debt.
4) Myth: getting a good education = higher salary
Reality check: this is true only if you choose the right major or learn very marketable skills from your college degree program and become passionate about what you do every day.
Many people go through college without learning anything useful at all. Some start educating themselves online after graduation because they realize that their major is not beneficial for their goals.
5) Myth: you have to be rich to start investing
Reality check: A good place to start saving money is right where you are now – first with a simple budget, then with setting a plan and then some savings plans so that your money will actually grow.
For example, if you save $1,000 per month starting from scratch (after paying bills) for 10 years in the investment account which gives 6% interest rate per annum – it means you’ll end up with almost half a million dollars! You can make even more by choosing less safe investment options – just don’t forget about the risk involved and why do it at all.
6) Myth: people in developing countries are poor
Reality check: the average salary for a family with children is much lower than that of a single person who barely survives. And this is without talking about other expenses most people have.
7) Myth: renting vs. buying your house – which one is better?
Reality check: both solutions have their advantages and disadvantages. One thing you should never forget is to repay your mortgage on time, every month – otherwise, it’s just unfair towards the rest of society living in peace and quiet because no one steals from them.
8) Myth: you can’t get rich by saving money at home (why do I have to work so hard?)
Reality Check: there are many ways how to get rich, and one of the most popular is through compounding – or in a nutshell – making your money work for you. For example, if you start with $1000 as a saving goal each month, after 10 years you’ll have over $200K!
9) Myth: buying lottery ticket = winning millions
Reality Check: it’s risky (sometimes illegal ) way of getting money because it doesn’t actually guarantee any return on investment. A lottery win can be more like winning a jackpot at the casino than anything else. You never know when will be your lucky day – so if you want to play safe, invest instead.
10) Myth: I don’t need advice from strangers on how to manage my money because it’s too complicated for me to understand
Reality check: it is true that math can be tricky, but fortunately there are people who love doing something they might not even need in their daily lives – just because they find enjoyment and joy out of learning new things.
When you’re passionate about something you don’t mind paying someone for his time and expertise. You won’t learn anything if you follow the crowd, by reading mainstream content that is already available online. Only original research can give birth to breakthrough ideas.
11) Myth: I’m not poor because I have a job (I make enough money)
Reality Check: A full-time employee makes about $30,000 per year (before taxes and deductions) – which is enough to live in poverty. Monthly expenses for a family with two children are about $3,500. What does it tell you?
12) Myth: I don’t earn enough to invest
Reality check: not true. Start with the first dollar you save and give it a job. Just put that money aside from your income and watch as it grows over time.
13) Myth: It’s too late for me to get rich because if all, life is hard (I’m poor now, so I will always be)
Reality Check: This is a hopeless way of thinking; far from being hopeful. If you start saving today, in 10 years you might be able to retire early – or at least enjoy retirement instead of keeping working until you can’t take it anymore because your body won’t allow you go on any longer.
14) Myth: Investing means risking your money (in gambling or other speculative things )
Reality Check: investing is not the same as playing the lottery. You should be aware of your risk tolerance and always keep an eye on what is happening in the market. The most important thing is to diversify your investments instead of putting all eggs in one basket.
15) Myth: I don’t have any savings because I live from paycheck to paycheck
Reality Check: it’s time to get a reality check since this situation isn’t going away until you change something. It’s easy to think you’ll be rich after landing your dream job, but let me remind you that there are no overnight success stories – so if you really want it, work hard for several years and then enjoy your success.
16) Myth: Money makes you a happier person (happiness )
Reality Check: money doesn’t help anyone buy happiness, but it does make life more comfortable. It’s much better to live with less stress – rather than worrying about how the bills will get paid this month.
17) Money Myth: family will help me pay my college fees
Reality Check: family can only do so much. A lot of students rely on student loans because these are the only available options for them, but keep in mind that $40K is not that easy to repay monthly when you’re starting out with zero savings aka living from paycheck to paycheck. You should consider looking into scholarships, grants or other prizes – which are available in abundance online.
18) Myth: a good job is all I need to get rich
Reality Check: unfortunately, no one likes to work at McDonald’s their whole life – and if they do, there’s something wrong with them. If possible, you should try working at a company that could give you opportunities for growth and advancement.
A lot of people don’t want to stay in the same job because it becomes boring. Some of us dream about getting rich but we’re afraid of losing everything we have (we’re not willing to risk anything). We love our lifestyle, but we might need some time to think things through before taking action.
19) Myth: money is evil (money can buy happiness, but you have to spend it right)
Reality Check: money is neutral. It depends on how you use your resources, and people who think that happiness can be purchased are wrong. You can turn $1 into a lot of things, but can’t buy it unless you have the cash.
That’s why we should always try to live within our means (especially if we don’t really need so many luxury goods)
20 ) Myth: having less than $5K in savings is normal (it’s ok not to have any savings)
Reality Check: I’m afraid this myth is normal because most young adults are living from paycheck to paycheck, which makes them believe they won’t ever enjoy retirement in their 60s and 70s.
But the fact is that not living paycheck to paycheck takes a lot of sacrifice and work. You should always be willing to postpone your gratification.
21) Myth: I don’t care about retirement because it’s too far away
Reality Check: who cares if this money pit is so far away? The point is you should start socking some cash as soon as you can, especially since a lot of people really need their savings in their 50s when they’re trying to retire early (I know what I’m talking about – my parents are hitting 60 in a few years and already planning for retirement).
Instead of retiring on social security, why not try something different? There are plenty of ways how retirement could become fun and exciting instead of boring and tedious.
22) Myth: money doesn’t grow on trees, so I’ll have to save less for retirement than I should
Reality Check: let’s not take the easy way out. If you’re only contributing a few bucks per month towards your savings, that really isn’t enough.
Instead of living frugally and saving nothing, it would be better to start saving as much as possible and live comfortably (but within your means). It’s good to invest in things that could give you higher returns over time – like real estate properties (especially if they’d appreciate in value )
23) Myth: traveling will make me rich one day
Reality Check: this is true only if you plan to get rich by working several part-time jobs (which I think is a very bad idea). The sooner you realize that saving money by cutting back on your expenses might be more beneficial than spending everything on vacations and entertainment, the better. It’d be nice to go on vacation once in a while but remember that it’s possible to have fun without breaking t h e bank
24 ) Myth: living frugally will help me pay my bills faster
Reality Check: if you want to live like a monk for the rest of your life, then this myth is true. But if you still want to enjoy some luxuries in your life, you’ll need more income s than savings (having money in the bank won’t necessarily make you rich).
You could raise your income s by starting a side hustle and saving money on unnecessary expenses ( you shouldn’t be spending more than necessary, but it’s possible to spend less without being miserable.)
25) Myth: I don’t need a budget because my bills are small
Reality Check: this is true only if you’re not living paycheck to paycheck. It’s almost impossible to get out of debt without a budget. And if you have too much debt, then cutting back on your expenses won’t help unless you actually manage to find a way to make extra money or increase your income.
26) Myth: money will make me unhappy
Reality Check: maybe this myth is true for those who are greedy, but I’m pretty sure that money can’t buy happiness if it’s not used correctly.
It’s good to have a lot of savings and live comfortably, but you need to find ways how you could use your resources wisely. Never ever spend more than necessary because then spending less would be pointless (you should try to save as much as possible instead).
27) Myth: there will always be someone richer than me so why worry about money?
Reality Check: just because that person seems rich doesn’t mean that you’re poor. Maybe that’s what makes them unhappy. You should start thinking about your life in a different way.
Start thinking about ways how you could improve your finances because then it really doesn’t matter if someone is wealthier than you.
28) Myth: living a modest lifestyle means being very frugal
Reality Check: this might be true during hard times when money is tight but remember that with time you’ll be able to afford more.
For example, you can still live comfortably while spending less money if you choose your housing situation wisely (invest in a cheaper property and rent out the extra rooms) or even make some cash by renting your own place on Airbnb.
29) Myth: cutting back on unnecessary expenses is boring
Reality Check: we all need to cut back on some things sometimes – especially during hard times – but this doesn’t mean that you have to do it forever. It’s possible to save money without giving up everything that makes life worth living. Do what’s necessary now and make sure that you still find ways how to enjoy life later (when your income improves).
30) Myth: what are some practical ways I could save money?
Reality Check: there are a lot of things you can do to save more efficiently like reducing your cable bill, cleaning up credit card debt and finding cheaper insurance. Take a look at the list below (there are 20 different ways to cut back on wasteful expenses) and choose what works best for you.
31) Myth: investing will surely make me rich in one year
Reality Check: some experts say that share market returns average around 7%, so if you’re young it might be easier to beat inflation but remember that having lots of savings alone won’t help. You need an income s source to pay bills so you should also do something about increasing your income s (even small businesses like flipping items on eBay can generate extra income).
32) Myth: my expenses are fixed
Reality Check: you should try to change your lifestyle to live more efficiently. There’s no need for the whole family to drive three cars, go on expensive vacations and buy handbags every week. If you want to improve your finances, start looking for ways how to cut back on unnecessary expenses.
33) Money Myth: I should wait until I have enough money before investing
Reality Check: some people who don’t know anything about the share market think that they should invest only after they save a lot of money.
But remember that compounding is exponential (it grows exponentially), so it’s important to find an interesting investment as soon as possible (having tons of money won’t help you if you wait too long)
34) Myth: I need at least a million dollars before starting an investment business
Reality Check: unless there’s something really unique about what you want to do, it would be very hard to succeed in that kind of business. You can generate extra income by buying items at auctions or garage sales and selling them online on eBay or elsewhere. You could also start a website and sell advertising space
35) Myth: you need to have enough money to invest before you can save
Reality Check: if you don’t use credit cards, it would be hard to spend more money than what you’re earning. If you continue living this way for few years, saving money will be easier since your debt s will decrease over time (you’ll have less to pay back)
36) Myth: investing requires knowledge but I’m not smart enough so it’s pointless
Reality Check: the only thing required for investment is your cash. It doesn’t matter if you’re young, experienced, or even graduated from Harvard University.
The most important things are that you have money and a willingness to learn. Most of the time, it’s more about having cash than intelligence.
37) Myth: my finances will take care of themselves so I don’t need to worry right now
Reality Check: if you’re young and want to improve your finances, make sure you start taking care of them now. Don’t wait until you have kids, a mortgage and tons of debt.
38) Myth: I will start saving after the wedding
Reality Check: since marriage is one of the most expensive events in life, it’s natural that newlyweds want to save as much money as possible.
Still, even if your honeymoon is free or cheap, you should try to cut down on expenses other savings accounts. Just remember that being careful with money today can help with retirement tomorrow.
40) Myth: buying insurance is useless because I’m healthy so I’ll just skip over this one
Reality Check: if anything bad happens to you or your family (like accidents, illness etc), you’ll need medicare and private insurance to cover medical expenses. It’s never too early to start thinking about your future.
41) Myth: building a savings account will give me the most interest. Why bother with other options?
Reality Check: if you have thousands of dollars lying around in a savings account, it might be an excellent idea to earn some extra income from that money. If you don’t, consider starting a business (even small ones like starting an online blog or selling items on eBay can generate extra income).
42) Myth: I should wait until retirement before trying to improve my finances
Reality Check: making sure that your financial situation is secure inside your working years means less stress and fewer worries when you retire. It also helps if something happens to you, your family is safer and better protected.
43) Myth: I should use my credit cards more so I can enjoy the rewards points
Reality Check: those rewards are nothing but a gimmick. They sound like a good idea, but most of them are for buying airline tickets which could be purchased at a lower price using cash. You’ll also have to pay extra for interest rates that are higher on average than other types of credit cards.
44) Myth: credit card companies offer better protection from frauds than banks
Reality Check: according to US Federal Trade Commission, only two percent of cases where money was stolen from a bank account send up in obtaining compensation.
On the other hand, consumers who lost money due to fraudulent charges on their credit cards received compensation in seventy-two percent of cases.
45) Myth: I can use my credit cards to buy something for someone else
Reality Check: you should only consider this if you have the money to pay back the charges. It’s also ideal if you know that person well enough to be sure that he or she will pay you back later (it would be awkward if they don’t).
46) Myth: paying with cash is a big waste of time because I’d rather not spend my time waiting in line
Reality Check: paying with debit or credit cards is more dangerous than carrying cash. It might seem convenient but it’s still valuable to do things manually. This way, you’ll never forget a bill due, and you won’t spend more than you can afford.
47) Myth: a mortgage should not be a part of anybody’s financial plan because it’s almost impossible to get approved for one
Reality Check: that’s no longer true. Banks are offering loans again, and there are many programs that will help you to get the best possible rate.
48) Myth: I’ll buy it later when prices drop since most things go down in value over time
Reality Check: experts say that buying electronics or appliances might actually help to lose value if they’re outdated within months.
49) Myth: stocks are too risky so I’m going to skip them altogether
Reality Check: even stock market fanatics agree that people who want steady growth should stick with mutual funds. Certificates of deposit also offer steady growth. Investing in stocks should be reserved for people who feel comfortable with risks and are willing to monitor their portfolios.
50) Myth: if you have a high credit score, you should expect more money from your bank
Reality Check: that’s not necessarily true. Banks and other creditors use the score to determine how risky it is to loan money to businesses or individuals. If you’re an excellent client, they might be willing to extend additional credit facilities.
51) Myth: I can get out of debt by using a balance transfer card
Reality Check: this only works if all your debts are under the same account. It could be useful when interest rates on one card are lower than those on others. But you have to remember that the interest rate could go up at any time, and your debt is still unsecured.
52) Money Myth: buying bonds means I’m just throwing money away
Reality Check: this is not true when you select a bond that matures at par value. This way, you’ll end up owning its original value back. Buying corporate or government bonds might sound like a gamble but it has a high potential for profit because of its low-risk factors.
53) Myth: credit unions don’t offer loans or other financial services so they’re not worth my consideration
Reality Check: only fifteen percent of credit unions offer auto loans but most do give personal loans with reasonable rates and agreeable terms.
54) Myth: having more than one chequing or savings account is a mistake because it’s just confusing
Reality Check: having more than one can be useful so you don’t spend money from the wrong account. Plus, it could help boost your credit score if you have several accounts that are consistently in use.
55) Myth: I’ll pay my bills on time even without reminders because I know what I’m doing
Reality Check: this is only true if banks didn’t fail, mail was always delivered and phones never dropped calls. People who want to keep their finances organized should consider signing up for automatic payments.
56) Myth: buying stocks on margin means that you can bet big but pay off late
Reality Check: when you borrow money from the broker to buy stocks, he or she can close your position at any time. You never know when or how he might seize those goods-and if you can’t make payments, you’ll end up with nothing.
57) Myth: opening a brokerage account means I have to spend my time learning all about the stock market
Reality Check: even novice investors should consider using this tool because it allows them to set their own priorities and goals. It also helps that trading is now automated, which makes transactions faster and easier.
58) Myth: online banking saves me money on banking services so I should always use it
Reality Check: most banks offer free checking accounts but don’t include other financial services. If you want these perks, automatic bill pay and other features, you might have to pay a monthly fee.
59) Money Myth: I have to pay taxes on my lottery winnings so it’s not worth going out and buying tickets
Reality Check: you don’t have to pay those taxes if you buy your ticket in Nevada. 24 other states also offer the same reprieve. And it only takes one big jackpot to make up for all those free games. So get out there and play.
60) Myth: charity is about giving stuff away to people who don’t need them
Reality Check: charities should be used as tools for improving lives, whether that means providing medical care or education. There are lots of ways to do this without handing money directly over.
61) Myth: credit card payments are due at the end of each month so I should pay them before anything else
Reality Check: depending on the company, payments are sometimes due at the beginning of a month. So if you want to avoid late fees, make sure you check your bill’s due date.
62) Myth: credit card interest rates go up with your balance
Reality Check: this isn’t always true. It doesn’t matter how much you owe; it depends on the payment schedule. With 0% intro APR offers, for example, the longer you take to pay off your debt, the higher that rate will be.
63) Myth: credit unions have fewer services and lower interest rates than banks so they’re not worth my consideration
Reality Check: yes, traditional banks do offer more options but these days credit unions are just as good. And like the banks, credit unions offer home loans, business accounts and all sorts of other financial services.
64) Myth: running up your credit card debt is an easy way to get out of the red
Reality Check: this could end up being a major problem since interest rates on these types of debts are higher than most loan types. Make sure you can pay it off in six months or less.
65) Myth: opening a savings account guarantees that you’ll have money at the ready for emergencies
Reality Check: saving is best left to those who truly understand how economics works. You need more than one type of financial plan to be successful-and sometimes investing pays off better than hoarding cash.
66) Myth: my credit score has to be 721 or above to qualify for the best rates
Reality Check: scores are calculated in different ways, so it’s hard to get an exact answer. But if your score falls within the “good” range, you’ll still have access to many of today’s best offers.
67) Myth: paying my credit card balance in full means I won’t pay interest
Reality Check: this isn’t always true. Paying your balance in full doesn’t mean you’ll never pay any fees. If you don’t carry a balance, though, you won’t have to worry about it.
68) Myth: once I’ve paid off the debt on my credit cards, I’m free from them forever
Reality Check: if you want to keep using credit, there’s nothing wrong with that. The most important thing is that you use it responsibly. Shop around for great deals and make sure payments get made on time.
69) Myth: when I get married, everything will be shared equally so we can each manage our money how we want
Reality Check: if you want to get married, go for it. But make sure money matters are discussed beforehand. In some cases, one person is the breadwinner and the other manages the household.
70) Money Myth: building a nest egg of $1 million in savings will guarantee I can live comfortably in retirement
Reality Check: that’s not necessarily true. The key is making smart choices with your money. Don’t be afraid to save frequently and invest wisely so you have enough cash on hand when you need it.
71) Myth: getting a loan means giving up something I own-like my car or house
Reality Check: taking out a loan usually doesn’t involve any real loss of property since most banks allow borrowers to continue using their vehicles.
72) Myth: buying tobacco products online saves me money because it avoids taxes and other fees
Reality Check: this isn’t always true, especially when states collect extra taxes on purchases made over their borders. Just make sure that your state doesn’t impose an online sales tax.
73) Myth: buying plane tickets on a Tuesday is the best way to find cheap airfare
Reality Check: there are plenty of deals out there. The question really is, “when will you be flying?” Do your homework so you can make sure you get the best deal according to your schedule.
74) Myth: saving $5 a day adds up quickly and will help me build wealth over time
Reality Check: the idea behind this is true in theory but it’s hard to put into practice. If saving $5 a day is important to you, consider putting that money toward your retirement.
75) Myth: women will have the last word when it comes to deciding where to spend their money
Reality Check: men and women share many of the same thoughts about finances so it shouldn’t matter which one makes the final call. Make sure you both get a say and can defend your opinion.
76) Myth: getting a good deal on something means I saved more money than someone else
Reality Check: just because you got a discount doesn’t mean you’re any smarter than anyone else. Be aware of other prices out there-including sales at competitors’ stores.
77) Myth: using the same bank as my employer will get me better interest rates
Reality Check: while it’s true that some banks offer special deals to people who use online banking services, there are plenty of other options out there. The key is to comparison shop and make sure you’re getting a good deal.
78) Myth: getting credit cards with rewards will help me save money on everyday expenses
Reality Check: these offers can be very tempting if you’re not careful. Take time to read over the terms so you can find a card that meets your needs. Many reward programs charge more for their rewards than they’re worth or have annual fees.
79) Myth: returning items without a receipt means I’ll never be able to re-sell them
Reality Check: stores may have policies in place for returns without a receipt, but it’s best to keep that original packaging just in case. There are plenty of resale options available, including online marketplaces and consignment shops.
80) Myth: if my employer offers an investment option through payroll deductions, all workers are eligible
Reality Check: not always true. If your company has plans to merge with another company or go out of business completely, any money held in your 401(k) might not be protected.
81) Myth: it’s better to save for a rainy day than to get my car fixed now
Reality Check: if you’re broke, putting off what are likely essential repairs may cause more trouble in the long run. As soon as you can afford to, make those fixes.
82) Myth: having a savings account means I’m taking good care of my money
Reality Check: there are plenty of ways to manage your money besides having a bank account. An atm or debit card can serve as well.
83) Myth: putting off buying my dream car until I have enough money means I’ll never be happy with my purchase
Reality Check: it’s true that waiting too long to make a worthwhile purchase could lead to buyer’s remorse. But you shouldn’t settle for something that will only save you the price of the down payment. Instead, think about what you want and how much you’re willing to spend on it so you’ll know when you’ve found the right fit.
84) Money Myth: if I work hard now, I can retire early and enjoy life later
Reality Check: most people don’t save enough money to retire early. The key is to start saving as early as possible and to set realistic goals for yourself.