8 Money Myths: Busting Financial Misconceptions 

by | Oct 12, 2023 | Finance

We all live by our own guiding principles in life – pieces of wisdom passed down about the best way to go about something or make your life easier. Like always keeping a stash of food, water, and flashlights at home in case of a power outage, for example.   
When it comes to money, we’ve all picked up various tidbits to help shape our financial choices and goals, often learning from friends or family. But upon further inspection, some money rules are actually myths: either slightly off from the truth due to nuanced situations, or downright incorrect! 

Here, we’ll uncover and dispel some common money myths to help you make more informed money moves. 

Myth: You need to be rich to invest 

Investing is not limited to the wealthy. Before the advent of the internet, you had to work with a broker who would call to place stock buy and sell orders for you, and that involved paying fees. Now, thanks to technology, investing is much more inclusive than it used to be. Platforms like online brokerage accounts and robo-advisors can allow you to start investing with no service fees or without needing to work with a stockbroker. You can buy stocks with just a few dollars – either inexpensive shares, or fractional shares to have a portion of a more expensive stock.  
Financial education has also become more accessible than ever, providing a wide range of resources to help you make more informed investment decisions. Whether it’s via a book, blog, or YouTube video, you can find financial gurus who break down investing fundamentals or the latest market information. Investing is no longer an exclusive club for people who already have money. Now, it’s a pathway to diversify building wealth beyond leveraging fundamental options like savings accounts. 

Myth: You need to be wealthy to be financially literate

Similar to investing, financial literacy is a skill that anyone, regardless of how much money you earn or have, can develop over time. In the past, financial knowledge may have been associated with affluence because money and the skills to grow it were passed down by family. However, financial literacy is about more than just amassing or managing substantial wealth; it’s about being informed so you can make the best decisions with the resources you have. Understanding how to budget or even how the modern financial system operates are two examples of elements of financial literacy that require no money at all. 
Being financially literate can help you grow your wealth by making the most of your resources and understanding things like investing, tax-advantaged savings accounts, and how to navigate loans successfully. Empower yourself by building your financial literacy – you’re already off to a great start reading this blog! 

Photo of an older couple walking on the beach with geometric glyphs, a dollar sign, and bar chart overlaid

Myth: You don’t need an emergency savings fund 

The unexpected can happen to anyone, and having an emergency fund is essential to make it through the storms of life. The “it won’t happen to me” mindset can lull you into a false sense of security – no one expects their house to be the one that burns down. While things like insurance can be part of a financial security net, or credit can be a fallback solution, having a cash buffer reserved for emergencies can help provide peace of mind because you’ve got liquidity.  
Some people choose to keep a certain amount as their emergency fund – their annual deductible for their health insurance, for example – or a few months’ worth of income. Either route will help set you up for success when an emergency or unexpected expense inevitably comes your way. 

Myth: Insurance is a waste of money 

Insurance may feel like an expense for which you don’t get anything in exchange, but you should consider it a strategic investment in financial security.  Whether it’s health, life, property, or automobile insurance, these policy safeguards provide a crucial safety net, paying out sometimes tens or hundreds of thousands of dollars. Mathematically, if you skipped the cost of premiums and saved or invested the money instead, you likely would not come out ahead – or it would take decades of an illness or emergency-free life to get close.  
Check out our blog on health insurance and supplemental types of insurance that can be well worth the cost!  

Myth: You can time the stock market 

The saying goes – “it’s not timing the market, it’s time in the market.” Due to recent stock market volatility being higher than usual, it may seem like the best option is to try to time it. However, that’s a lot riskier than investing little by little and being patient over the span of years or decades. Some stock professionals may have expertise that gives them the precision to maximize their returns on trades, but they’re professionals for a reason.  
Instead, the key to building wealth by investing really comes down to the time spent in the market, which allows investments to weather short-term volatility. And you can benefit from compounding growth, like dividends, over time. A business professor from New York University found that since 1949, investments in the S&P 500 have doubled ten times, at an average of every seven years. That’s motivation to be patient! 

Myth: You should pay off your mortgage as fast as possible 

Being debt-free is great, and getting out from under the responsibility of a home loan and owning your home free and clear does have its benefits. However, that doesn’t mean paying off a mortgage as quickly as possible is always the optimal financial strategy. Over the last twenty years, mortgage rates have often been relatively low compared to potential investment returns. For those people who have locked in low mortgages, pay extra close attention. Sometimes, a high yield savings account can get you a better return!  
Additionally, consider tax implications like mortgage interest deductions which can be valuable. It’s a balance between debt reduction and wealth-building. There’s no one recommendation that will serve every person – so be sure to closely evaluate all your options! 

Myth: I can save for retirement later, saving a little now won’t make a difference 

Retirement savings compounds over time, so get started as early as possible. Not to mention, there are annual limits to how much you can contribute to retirement accounts like 401(k) and Roth IRAs, and you can’t go back in time. There are also income limits for Roth IRAs, and you never know if one day you’ll earn over the limit.  
Starting early can allow you to contribute less but have a larger nest egg by retirement. Check out our blog on how to start saving for retirement for more details and a breakdown on why it’s so valuable to start as early as possible. 

Myth: I don’t need to budget if I make enough money 

It may feel like a budget is a way to limit your spending, or something you need to manage money if you’re living paycheck to paycheck. But at all income levels, budgets are a tool to help you get the most out of your money. For even those high earners, a budget can still help you mitigate lifestyle creep and be intentional with your spending. Remember: you can build a budget to fit your lifestyle, and budget for plenty of fun purchases along the way. 


We learn about money how we learn about a lot of things in life – general wisdom, or common assumptions, passed down from generation to generation, or friend to friend. When it comes to money, though, it’s a lot more nuanced than a special cooking technique your grandmother taught you. It’s worth researching and validating what’s most applicable to your financial situation. Now that we’ve busted these money myths, you can keep moving forward in your financial literacy journey! 

Read more on the Milli blog: 

All About Annual Percentage Yield and how Milli Pays Interest 
Fine Tune Your Finances: Intermediate Budgeting 
How to Save $5,000 in One Year