The 6 Money Myths You Should Drop in the New Year

By Chika


Last Updated: January 6, 2022


Money is a deeply emotional subject that evokes strong emotions.

We all have deeply-held subconscious beliefs about money. This in turn has affected how we view and manage money. These preconceived notions have also created and reinforced several myths which have maintained a wrong perception about money. 

We have to realize that money transcends beyond our account balance. Money is less mathematical, and more about emotions. The creation of myths around money stems from our lack of understanding. 

Worse still, the explosion of digital media means that people now have more than a fair share of access to financial information. However, this has also led to the proliferation of poor financial advice which has kept many people in the same financial state for years without any visible sign of improvement. 


Here are 6 Money Myths We Need to Dispel to Move Our Finances Forward

1. Money is evil.

This undoubtedly is the most propagated myth about money.

Many people see money as a force of evil, a tool in the hands of the oppressors to keep others perpetually subservient. This is why there have been many agitations against rich folks and financial institutions. This fact has not been helped by politicians who have capitalized on these negative emotions to score support. 

However, having such notions only keeps money away from you.

Nothing is inherently good or bad, but rather how we use it. As such, the way money is used is only a reflection of the character of the possessor. This implies, in the hands of someone with sound character and values, money can be used for constructive purposes and vice versa.  


2. Investing is not easy.

Many people think that you need to be a genius to be able to invest your money profitably.

We all look up to legendary investors like Warren Buffett and Charlie Munger like they have a magic wand that they can use to conjure up good investment opportunities. Others believe that unless you hire a professional, you can't make money from investing. 

The truth is that investing is easy, but you also have to dedicate time to learn the ropes, like every other endeavor in life. You have to study and learn the asset class you are interested in. Thanks to the internet, there are lots of quality material which one can use for self-study. 

As a retail investor, you do not need to know about complex investment vehicles such as stock options, CFDs, or other forms of derivatives. Sometimes, simply investing in index funds is enough for you to grow your portfolio. 


3. You need debt to get ahead.

We live in a society that encourages us to borrow and get into debt.

Debt is seen as a way of life without which you cannot achieve major life milestones such as going to college or having a house. Americans increasingly spend more than they earn. The proliferation of buy now, pay later schemes means it is now easy to give in to our cravings - even though we don't have money. 

Since 2008, household debt as a proportion of gross domestic product in the United States has grown by over 200%. The current surge in the housing market has propelled household debt to its highest level in 14 years.

Debt can help buy a house, further your education, or start a business.

While it may come in handy, you should recognize that it comes at a cost. Borrowing to meet certain obligations is only a short-term solution to a long-term problem.

Your goal is achieving financial independence. You can't say your finances are independent when every month you are obligated to make a repayment for a certain loan which comes with an interest rate.  

As such, the best and most certain way to attain financial independence is getting out of debt. You do not need to have a lump sum to reduce your doubt burden. A little extra amount each time goes a long way in reducing your capital and total accrued interest.

You can reduce debt reduction strategies such as snowball or avalanche processes to develop a consistent debt repayment plan. 


4. Kids should concentrate on studies, not how to make money.

How our parents handle money provides the foundation for how we may handle money.

This is the reason generational poverty and generational wealth exists. Wealthy people tend to impart their philosophies and strategies on wealth creation to the children.

Coupled with that is the inability of poor people to fund further education for their children and the advantage children from wealthy homes have right from the start, and so the cycle continues.

On the other hand, mid-income and poor people can impart bad money habits and beliefs to their children. They believe that money is not a topic to be discussed with kids else it would distract them and lead to misprioritization of life goals. 

Perhaps more worrisome is the parents are not good financial models themselves. They have a litany of poor financial choices and are head-deep in debt. So the kids grow up believing that it takes a genius or stroke of luck. They disregard the place of careful, meticulous, and consistent income generation as a prerequisite for building generational wealth. 

Add to that the fact that formal schooling does not include financial education. So we go forth into the world with little or no financial roadmap and soon we are making bad financial decisions, running up debt, and have ourselves entangled in a financial mess in next to no time.

As early as possible, you should start to instill good money habits in your kids.

Use every opportunity to teach them and make them learn from your mistakes. Teach them the power of compound interest and why it is necessary to have a long-term financial road map. This would enable them to avoid financial traps such as too much debt, poor credit score or bankruptcy, and set them on the path of financial independence. 

Read this next: 6 Awesome Opportunities to Teach Your Kids About Money


5. Save money on coffee.

You’ve probably heard this common financial tip before: If you want to save money, stop buying coffee out and make it at home instead. Many financial experts have blamed coffee expenses for the reason why so many Americans are not able to save or invest as much as they should.

The basic idea is that if you forgo a $5 coffee every morning, you would have quite a bit of money to contribute toward savings instead. Although 42% of Americans follow this philosophy, 18% say it’s one of the most annoying pieces of financial advice out there

This advice is contentious for various reasons. Firstly, it would take a lot of coffee purchases and a high annual rate of return (10-12%) to turn your latte savings into $1 million. Plus, if you budget responsibly you should be able to spend a portion of your income on whatever makes you happy, whether that’s travel, clothing or a daily coffee run.


6. You can hit it big… a short amount of time.

Many people still float around this concept that you can make a huge amount of money in a short amount of time.

This notion is being propagated by those who have made huge returns on their 'investments' in cryptocurrencies such as Dogecoin and Shiba Inu, meme stocks, or NFTs

While you can dismiss this fact, you should bear in mind that the probabilities of making it from such opportunities are very limited. This implies that it is the exception rather than the rule. You can only build long-term wealth through saving, investing, or effectively managing and growing a business. 

The good part is that you get to build your character and financial discipline as you work your finances up. These would enable you to hold onto your wealth when it grows significantly.

On the other hand, hitting it big through some lucky shot would not prepare you to manage your sudden wealth. This is why lottery winners go bankrupt after some years. 



At the end of the day, we have to keep challenging old rules. The finance world is fluid, and if we don't stay flexible and keep learning, we will be left behind. Besides, we don't want to repeat the mistakes of the generations before us. 

Photo by Markus Winkler on Unsplash


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