12 Nonsensical Financial Myths That People Actually Believe

Americans suck at finance. Here’s some of the doctrine behind how we see money:

1. You should carry a balance on your credit card.

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Unless you get a deep personal satisfaction from paying interest rates, you should always pay off your balance in full every month.

2. Savings accounts will earn interest.

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They'll earn PENNIES, that's what they'll earn. According to financial experts, you can actually lose money by leaving your money in a savings account that doesn't keep up with inflation.

3. Owning a home is a financial fail safe.

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Ask anyone who's tried to unload a house in this economy. You might earn money, but you might not.

4. You need lots of money to start investing.

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Some brokerage firms are hard noses, but others have no problem with you investing small amounts over time.

5. You need credit to do anything.

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It certainly helps, but there are plenty of ways to get around a blank credit history, including cosigners and bigger initial deposits.

6. Banks are the safest places for your money.

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Uh, how many banks have needed bailouts again? How many get shut down? The answer: between 50-150 a year.

7. You're too young to worry about retirement.

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The cliche is true: It's never too early to start thinking about the future. If you don't want to rob banks in your twilight years, start saving now.

8. Stock market lows are the devil.

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The sky is falling! The sky is falling! Oh, wait. Market dips are actually a great time to scoop up stocks and make investments that you otherwise couldn't afford.

9. Higher incomes mean higher taxes.

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You're only charged marginal tax rates after a raise. For example, if you've gotten a pay bump from $30,000 to $35,000, you'll only be charged extra taxes on the $5,000 increase.

10. Remodels help your property value.

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Nope. In some cases they can actually diminish it. Large-scale renovations to kitchens and bathrooms can wind up raising your property taxes and lowering your resell value.

11. The IRS won't notice that shady deduction.

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People get away with it, which is why others think they might slide on by, too. But ask the filers who get audited, fined and penalized if that $50 write-off was worth it.

12. Bankruptcy is a way to start over.

Bankruptcy won't wipe away certain kinds of loans and taxes. You'll still need to pay them off, and what's more, you'll have a big red flag on your credit history when you try to buy a car or lease a new apartment.

A special thanks to Abakhan & Associates Inc for the financial insights that helped this article come together.