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13 Money Myths to Toss in the Trash

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Don't get hung up on these money myths!

When it comes to money management, it can be hard to separate fact from fiction. Some age-old financial advice like “never spend money before you have earned it” (Thomas Jefferson) still rings true, but there are a lot of widely accepted beliefs about money that could be holding you back from the financial well-being you deserve. Here, we explore 13 money myths you should ditch to build a smoother, smarter path to financial success.

Money Myth #1: Managing money is confusing and complicated.

When you are just dipping your toe into the world of personal money management, it can be overwhelming. Rest assured, there are plenty of resources out there to help you navigate your way to financial freedom and independence. If you need guidance, we offer free financial counseling through GreenPath Financial Wellness, a non-profit organization that provides individualized counseling and tools to help our members meet their goals and improve their overall financial health.

Money Myth #2: It’s rude to talk about money.

Many of us were brought up with the idea that talking about money with friends and coworkers is taboo. Fortunately, the social code around money is changing. This social rule comes from the idea that wealth equals value and, therefore, asking someone about their financial status (or what they spend or make) is akin to asking them about their place in the social hierarchy.

The thing is, talking about money—like what we make, what we pay in rent, etc.—saves us from financial risk and prevents us from being swindled into paying more than necessary. For example, say you are considering an apartment that rents for $2,300 a month and find out a neighbor is paying just $2,000 per month for the same size space. That information could help you negotiate a cheaper rate. Or consider a workplace scenario where you have been offered a promotion and are asked to make a salary pitch. If you don’t know what your colleagues are making, how can you know what a reasonable starting salary is? If the topic of income is forbidden in your workplace, you could be paid significantly less than someone else who is doing an equal amount of work (and never know it).

Money Myth #3: A six-figure salary will buy you happiness.

The phrase “six-figure salary” (which means anything between $100,000 and $999,999) used to signify the pinnacle of financial success, but these days it doesn’t necessarily mean worry-free living. For one thing, a six-figure salary does not afford the same lifestyle as it did just a decade or two ago. Inflation, student debt, the rising cost of housing, and increased healthcare expenses mean it’s more expensive than ever to lead a “standard American lifestyle”. In fact, a 2020 study by showed that the average annual cost of the “American Dream” in Oregon was $166,339—a number that has likely risen with inflation rates since the study.

Money Myth #4: If you make more money, your financial problems will be over.

Notorious B.I.G. debunked this myth back in 1997 when he said, “Mo Money, Mo Problems” Yet, when we get a big promotion or come into a financial windfall, it’s easy to assume that our financial problems will be easily solved. Sadly, when it comes to increased wealth, there is often a sneaky side-order known as “lifestyle creep” or “lifestyle inflation”. This refers to the trend when your standard of living increases exponentially as your income rises. Sometimes this happens as we reward ourselves with things like a better home, a better wardrobe, or more vacations. Sometimes it happens as we try to keep up with the wealthier circles that we travel in. Either way, it is a very real phenomenon that often leads to greater debt.

Money Myth #5: If you are living frugally, cheaper is better.

When money is tight, it’s difficult to justify spending a lot for necessities. But buying cheap often ends up costing you more. Low-cost big-ticket items that get a lot of wear and tear—like couches, mattresses, stoves, and refrigerators—are likely to need replacement a lot sooner than high quality versions of the same. If you can swing it, save for the item that will last longer and you’ll spend less in the long run.

Money Myth #6: You must buy a house to live the American Dream.

Ask almost anyone to define the “American Dream” and their description is likely to include owning a home. As recently as 2022, a survey for reported that 74 percent of respondents ranked homeownership as the highest gauge of prosperity—higher even than having a career, a college education, and a family. But the youngest generations of adults (millennials and Gen Z) are shifting that dynamic and opting to stay untethered to real estate. The reasons are diverse (and a lack of affordability, rising student loan debt, and other financial barriers are certainly among them), but for many young adults, owning a home is simply not a cost-effective choice. That goes double for those who live in expensive urban areas. If you are uncertain where you want to put down roots or anticipate a career change that may necessitate a move, renting a home or apartment indefinitely might be the better choice. 

Money Myth #7: If you are on a budget, you’ll miss out on all the fun.

Living frugally doesn’t mean you can’t have fun. Set a budget for yourself that includes an allotment for entertainment and seek out free or inexpensive events and activities. Spend time outdoors and visit local parks. Have a picnic instead of dining out. Look for free community events (like Salem Art Walk) and follow the hashtag #freethingstodo on TikTok and Instagram for inspiration.

Money Myth #8: You can’t negotiate your bills or debt.

Many people assume that debts—like medical bills, cable bills, utility bills, and past credit card debts—are set in stone, but that is not always the case. With service providers, ask if they can give you a discount or lower rate. With medical debt, get to know your insurance policy so you are clear on what is and is not covered. Ask for an itemized bill so you can check for discrepancies. Ask about your options before the bill goes to collections or before you pay it off. With some providers, you may even be entitled to a discounted payment plan or a “pay-in-full discount”.

Money Myth #9: You can’t start saving until you are debt-free.

Paying off debts can make saving money feel impossible, but with a little ingenuity, you can stay on track while also getting ahead. The key is to prioritize your debt payments first so you can continue your forward momentum. Set a savings goal and build a budget that allows you to make regular debt payments while still saving a small amount each month.

Money Myth #10: You need to be rich to start investing.

You don’t need a big balance in your bank account to start investing. Many financial institutions offer CDs and IRAs with a low minimum deposit amount and you can invest in the stock market for as little as $1. Whether you opt for a short-term certificate of deposit, long-term IRA, or choose to dabble in the stock market, there’s an option for every financial goal. Talk to an expert about what would make the most sense with your budget and spending habits. A smart investment strategy can be the best way to put your money to work and get on track to financial independence. And, if your employer offers you a stock option (especially if there’s no cost to you) take it.

Money Myth #11: Credit cards are bad news.

It’s wise to be wary of credit cards, but they are useful for building a strong credit history—which is essential for everything from buying a car to securing housing. Take the time to find a card that fits your spending habits and credit situation. If you qualify, choose a card with incentives like low-interest rates, cash-back rewards, 0% APR, or low annual fees. Once you have a card, use it wisely and try to pay off your balance every month so you can avoid accruing interest.

Money Myth #12: It’s always better to pay with a debit card instead of a credit card.

Using a debit card instead of a credit card is a great way to manage your spending because you can only spend what you have available. But, if you need to build or repair your credit history, a credit card may be the best way to do it. Charge small amounts, make timely payments, and pay off your balance regularly to see your credit score climb. It might also be a good idea to use a credit card for online purchases as most credit cards offer better fraud protection than debit cards.

Money Myth #13: Credit card = Emergency fund.

Many experts recommend that you keep at least three to six months’ worth of living expenses in an emergency savings account. This will provide a cushion if you experience a job loss or other unexpected expenses. With such a sum, it can be tempting to rely on credit cards to get you through a dry patch, but this only produces more debt. To make matters worse, you could be stuck paying off interest rates long after the crisis has ended. Instead, prepare yourself (for whatever may come) by saving a small amount (perhaps just $25) each week or month. Build slowly towards having at least $1,000 in a rainy-day fund. By setting aside just a little bit of cash consistently, you can build up a fund that will get you through lean times.

The bottom line is, think twice about what you hear when it comes to money management—even if that advice comes from dear old Aunt Sally or Grandpa Joe. Financial advice is everywhere—from TikTok to the self-help aisle at the bookstore—but not all money-saving solutions are one-size-fits-all. The world is constantly changing. Relying solely on traditional beliefs without proper due diligence can lead to undesirable outcomes and financial losses. If you are considering a big financial decision, seek advice from trusted professionals, conduct thorough research, and exercise critical thinking to ensure the soundness and legitimacy of any financial recommendations received.

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