13 Really Common Money "Facts" That Actually Aren't Facts At All

Nope, nope, nope, please don't believe these "facts".

A lot of us don't get a great financial education from our families or in school, which can make figuring out all our money stuff pretty tricky. And as if it's not already hard enough, there's also a lot of misinformation out there.

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To help you sort out the actual facts from the fiction, I rounded up 13 common money myths, plus what you actually need to know:

1. "You don't need to worry about investing for retirement until your 40s."

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Nope, nope, nope. In fact, the earlier you can start putting money away for retirement, the better, thanks to the magic of compound interest. This is when you earn interest on your investments and then earn more interest on top of that interest. And the sooner you start investing for retirement, the more time your money has to grow.

So if your workplace offers a tax-advantaged retirement plan like a 401(k), it's a good idea to take advantage. If your employer doesn't offer this benefit, you can always open an IRA (individual retirement account) on your own to get your nest egg started. Even if you're only able to contribute a little bit at first, it can really add up over time.

2. "Saving small amounts of money isn't really worth it."

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I get it. It can be really discouraging to compare experts' recommended savings amounts with your own low (or nonexistent) balance. But having even $100 saved can help a little bit in an emergency. Every dollar that you're able to put away is another dollar that you won't have to pay back with interest when an unexpected car repair or vet bill comes along.

One way to help yourself save is by putting your savings in an account that helps you grow your fund. Many experts recommend high-yield savings accounts because they'll pay you more in interest than the typical savings account. But my personal favorite place to keep my emergency fund is Yotta. It's a prize-linked savings account where you can win money every week from their lottery-style drawing. So far this year, I've won about $100 from my Yotta account (and that's a whole lot more than the 10 cents or so that I'd get from a regular savings account). Plus, they make it really easy to start and stop recurring deposits so you can automate your saving habit and make adjustments when life happens.

3. "You have to have a lot of money to start investing."

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This was often true back in the 1900s but in 2021, you can kiss this "fact" goodbye. Now, non-rich people can get in on investing for as little as a dollar and there are plenty of beginner-friendly apps and resources to help you learn about the market.

Investing can be a way to grow your money, especially during periods of inflation (like right now, for example). If you're only saving money but not investing, then your money might actually end up having less buying power over time if inflation rates are higher than your savings account interest rate. Investing gives you a chance to beat inflation and set funds aside for future you. 

4. "Credit cards always lead to debt."

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Many people are afraid to get a credit card because they see it as a debt trap. Though it can definitely be way too easy to rack up a balance, it's also possible to use a credit card strategically to cash in on rewards and build your credit score.

A great way to get started is to only use your credit card for one or two of your regular bills, then pay it off in full each month. This helps you build a positive credit history while avoiding interest charges. Plus, it can help you get in the habit of using your credit card only for expenses that you can afford. Of course, you know yourself best. If you've run into credit card problems in the past so you avoid using credit or if you just don't feel ready to apply for a card, that's okay too. 

Psst, if you could use a refresher on credit cards, check out these tips that they really should have us learn in school. 

5. "Carrying a balance on your credit card will boost your credit score."

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Oh, credit scores. These three-digit numbers are the cause of so many headaches and, unsurprisingly, people believe a lot of myths about them. One popular credit score myth is that you have to carry a balance on your credit card in order to get a higher score. 

But that's actually not true at all. Here's why: Your credit score gets calculated based on five factors, one of which is your credit utilization (aka, what percentage of your available credit you've used). And when it comes to your credit utilization, generally the lower you can get it, the better it will be for your scores. 

There's no benefit to carrying a balance on your credit card if you don't have to so pay it off in full whenever you can. You'll pay a lot less in interest if you do so.

6. "You should spend no more than 30% of your income on housing."

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As someone who grew up in California, I've long been baffled by this rule. Like, what version of reality did it even come from? Welp, I looked it up and the answer is 1969. That's right. It's from over 50 years ago. Soooo...it could use an update.

These days, almost half of all renters in the United States spend more than 30% of their income on housing due to continually rising rents and a lack of affordable housing (not to mention stagnant wages, ugh). Lower-income renters tend to be the most rent-burdened and rent is not affordable on minimum wage anywhere in the US.

So while it would be nice to be able to stick to the 30% rule, it's simply not possible for many of us at this time. Sometimes, the best we can do is try to keep housing costs as low as possible and adjust our budgets elsewhere to make it work. 

7. "Buying a house is always a better option than renting."

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You've probably been told at some point that renting is just "throwing your money away" but home ownership isn't always the right fit either. Buying a home can come with many hidden costs and some people actually regret taking the plunge into home ownership. Between repairs, improvements, insurance, and property taxes, things can add up fast. 

Here's a way of thinking about it that I've found really helpful: When you're renting, your rent is the most you'll spend on housing that month. But when you own a home, your mortgage is the least you'll spend. What those numbers ultimately look like for you depends on where you live and the rest of your budget. 

I'm not saying don't buy a house. Rather, run the numbers, keep up with your finances, and choose what truly makes the most sense for you. No shame either way.

8. "Negotiating a higher salary will make you seem too pushy."

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It's a common fear that asking for more money will make a potential employer think twice about offering you a job. But more often than not, that's simply not true. A polite and professional negotiation is often expected and as long as your request is reasonably in line with industry standards in your area, the worst most employers will do is say no. 

Sure, there are awful bosses out there who might rescind an offer if you try to negotiate but you probably don't want to work for someone who's that unprofessional anyway. As Alison Green perfectly explains it on Ask A Manager, "If they react so bizarrely to such a normal move on your part, imagine how they handle requests for time off, raises, or new projects." Yeah, no thanks.

BTW, not sure how to even negotiate salary? People shared how they've successfully asked for more and it's so helpful.

9. "Only irresponsible people have debt."

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Oh, how wrong this is. We live in a money culture that really demonizes debt but being in debt is truly nothing to be ashamed of. According to NerdWallet, 75% of American households are carrying some form of debt. Does that mean three out of every four of us are irresponsible? Absolutely not. In many cases, it just means that we didn't have the cash that it takes to, for example, go to college, buy a car or house, or pay ridiculous medical bills. 

Carrying debt can be stressful and expensive, and it's certainly not fun. But it doesn't mean that you're bad, lazy, or foolish. So try not to beat yourself up about your credit card bill or your student loans. And if shame about your finances is keeping you down, you might like these tips from a financial therapist for overcoming it.

10. "Budgeting is restrictive and painful."

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So much of the way we tend to talk about budgeting reminds me of diet culture. There's all this "cutting" and "restricting" going on, which makes it sound like making a budget is going to be a terrible and tedious chore. But it actually doesn't have to be that way at all.

At its core, a budget is just a plan for your money. It shows you how much you have coming in, how much you have going out, and where that money goes. Taking charge of your cash and making a plan can actually feel empowering. There are so many different ways to budget so if you've never sat down and done so, try a couple of methods to see what works best for you.

11. "It's completely safe to shop online with a debit card."

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When it comes to the data you reveal online, it can really pay to be careful. And unfortunately, using a debit card online just doesn't offer the same fraud protections as a credit card. Since a debit card links directly to your bank account, an identity thief who gains access can steal your rent money right out of your account. And it can take a while (and a lot of phone calls) to get it back. 

But if a thief uses your credit card, they've technically stolen from the credit card issuer and credit card companies are generally really quick to reverse fraudulent charges and get you off the hook for money you didn't spend. ACH payments, voice payments, and payment apps can also offer more security than debit cards.

12. "If your partner manages the money, then you don't need to worry about it."

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FALSE. While it can be tempting to let your S.O. take the financial reigns, you should still keep up with your money and know what's going on. Not to scare you but what would happen if your partner suddenly died? Would you know how to access accounts or what resources you have? It's also possible that your partner could be keeping you in the dark about a big financial secret. 

Ultimately, it's better for both of you if you can talk about and handle all your money stuff together. It can be awkward and you might even sometimes fight about money, but it's so important to know the whole truth about your financial situation and be involved in planning your future together.

13. And finally, "money doesn't buy happiness."

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Actually, research has shown that money can make you happier but only up to a certain income level. A 2010 study found that people at lower-income levels felt better as they earned more. This effect started to leveled off at about $72,000 a year (roughly $92,000 in 2021 dollars). 

It makes sense. Stressing over money can really affect your quality of life. But once you make enough to comfortably cover your needs and save for the future, it can feel like a huge weight has been lifted from your shoulders.

Do you know any other money "facts" that simply aren't true? Share your thoughts in the comments.

And for more stories about life and money, check out the rest of our personal finance posts.