Who hasn't been to work, at a party or leaving the annual family reunion and heard something along the lines of, “Money can't buy happiness!”
We have all been somewhere at some time and heard some off the wall comment about money that perhaps you even thought was true.
I vividly recall hearing someone saying that maxing our your credit card is a great way to build credit!! That is also a recipe to pay endless amounts of credit card interest!
Living in a world where it is easy to copy and paste your opinions or cute quotes can be a great way to get attention, but it can also confuse people when it comes to their finances.
Which is why I made this list of the most common money misconceptions that simply aren't true!
The 9 Most Common Money Misconceptions
“Wealthy people – all they think about is money.”
One of the biggest misconceptions about money is that all wealthy people do is think about money… when in all actuality it is usually the opposite.
Those without lots of money or those who have financial problems are typically the ones thinking, stressing, and conversing about money more often than not!
Think about it, if someone is a really good steward of money and they make some smart choices and delay their gratification for 10-20 years and create wealth – chances are they aren't thinking about money as often as someone who hardly as any!
“It will work itself out, don't worry”
Maybe it's me, but sometimes I feel like people who don't have a lot of financial sense seem to say some of the dumbest things when it comes to money.
Imagine if you went to the doctor's office and they found out you had some serious health concerns, followed by this statement,
You look like you might have a spot that could be cancerous, but don't worry it will work itself out.”
Yeah right! You would want that spot removed ASAP. And while this is an extreme example, one of the most common misconceptions about money is that it just works itself out!
Your credit card debt, student loan debt, mortgage, daycare expenses, car payments, and food bills don't just work themselves out.
Making calculated and conscious financial choices is what works things out, not just hoping and praying!
“Rich people got everything handed to them”
While the exact statistic has most likely changed over time, believe it or not, most millionaires are self-made according to the book, Millionaire Next Door.
The common misconception is that millionaires were “Handed their wealth” by their parents.
There are certainly plenty of cases where having good connections, mentorship and capital can help someone advance themselves quicker, the truth is rich kids are typical quite the opposite.
In most cases, hard work, commitment, and a drive to achieve some big goals got their parents to where they're at. However, the genes typically don't always get passed on.
The cushy lifestyle they created for their kids doesn't instill the same drive and hunger! So next time you meet a millionaire, don't assume it was handed to them – because it most likely wasn't!
“Leasing a car is always a good idea”
The Latin word for lease is rent.
No, just kidding I made that up, but essentially that is what leasing a car is. Think about it, when you lease a vehicle there are stipulations to how many miles you can drive it and at the end of the lease, you can either turn it in (And get nothing) or buy it and continue to make payments on the vehicle.
When you rent a car, the process is pretty similar. Now, there are cases when leasing makes sense based on work, business ownership and where you live, however in general, leasing is not a good idea, its actually a really bad idea!
Look at it this way – car companies wouldn't promote leasing so often if it wasn' advantageous for them!
See also, Never Buy New Cars
“You can't take your money to the grave with you”
It's almost like people with very little financial sense all speak the same language.
While it is true money won't do you very good once your dead, you can leave behind a legacy and estate for your kids and their kids. Typically this money misconception is used by people who view your financial discipline and drive and it makes them uncomfortable.
Instead of recognizing that they have poor financial habits (Like not valuing time or growth of money), they say cute things to put down your efforts.
On another note, this comment is very inaccurate. You could actually list in your will to have all your money buried alongside yourself if you really wanted to 🙂
“Millionaires drive expensive cars”
Millionaires drive things they can afford and that are within reason. Sure you might see celebrities flashing their glitz and fame with fancy cars, but in most cases, the effort it took to become a millionaire goes far past nice cars.
By the time a person reaches millionaire status, the idea of owning a super fancy car just isn't worth the cost. Similar to number three above, the discipline and drive it took to get to seven-figures far supersedes an expensive car.
In fact, those who typically drive super expensive cars are actually leasing them and drowning in debt.
“Focus on your credit score”
Instead of focusing on your credit score, perhaps not taking out debt, spending less than you make and making more money are some better areas to focus on.
Just like weighing yourself daily, focusing on your credit score doesn't really do much unless you're looking to buy some big-ticket items. This isn't to say having a solid credit score is useless, it's just to say focusing on it is sort of silly.
Simply paying off your debt really fast and earning more will do way more for your financial well being (And credit score) than taking out more debt to “Up your credit score.”
“God will get me out of this hole”
Hear me out, this may be the first time I ever wrote the word “God” in a blog post and I am not looking to step on any toes.
However, I have heard (And I am sure you have too) on numerous occasions that God is going to save someone from their own financial destitute.
I am not a spiritual expert or a pastor, but from my simple understanding that is not how God works. God doesn't work miracles just because. You can't keep all the same habits and think that things will just fall in your lap.
Don't misinterpret this as me saying don't have a strong faith. I will leave it at that.
“You only live once.”
I saved the best for last! The most common money misconception you will hear is the common phrase, “You only live once.”
If you find yourself making money moves to better your self and you hear naysayers say things like, “Well you know, you only get one life to live,” keep in mind that anytime you pull away from the crows there will be naysayers!
Often times, people will justify their lack of ambition or drive with cute misconceptions like YOLO!
I am sure the comments will line up below, but broke people speak a broke language. After alluding to it several times already, someone will often justify their position in life by degrading your position or drive.
Instead of taking personal responsibility (Which is not in their general nature) they will say things to tear down your drive!
How do I know this? Because this happens to me all the time!
But don't feel sorry, I actually love hearing these sorts of money misconceptions as they really motivate me to want to do more!
My biggest suggestion for you if you find yourself hearing this, or worse saying things like this, make sure you understand the true root as to why it is being said.
Chances are, it really isn't that valid!
Question: What are some money misconceptions you would add?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎