The smartest people don’t just make money—they know how to keep it.
Plenty of financial advice gets passed around like absolute truth, but not all of it holds up under scrutiny. Some of the most widely believed money myths are actually keeping people stuck in bad financial habits, wasting time, and missing out on opportunities to build real wealth.
Those with a high financial IQ don’t just question conventional wisdom—they laugh at it.
The difference between those who struggle and those who thrive financially isn’t luck. It’s knowing which money “rules” to follow and which ones to ignore completely. Some myths sound logical on the surface but fall apart when you dig deeper.
Others were true once but are outdated in today’s financial world. If you’re serious about leveling up your money game, it’s time to challenge these common myths and rethink the way you approach wealth.
1. Renting is throwing money away while buying is always an investment.
People love to say that renting is “wasting money,” but that’s not always true. Owning a home comes with hidden costs—property taxes, maintenance, interest on the mortgage—that can make it just as expensive (or more) than renting, as reported by Buzzfeed. Plus, home values don’t always go up, and selling a house comes with its own expenses.
Renting offers flexibility, fewer unexpected costs, and the ability to invest money elsewhere instead of tying it all into real estate. Financially savvy people know that whether renting or buying is better depends entirely on personal goals, market conditions, and lifestyle needs.
2. Carrying a credit card balance helps build your credit score.
Some people think they need to carry a balance on their credit card to improve their credit score, but that’s just a costly mistake, according to Lending Tree. The truth is, paying off your balance in full each month is the best way to build good credit while avoiding unnecessary interest payments.
What actually boosts your credit score is keeping your credit utilization low—meaning you use less than 30% of your available credit. Carrying a balance does nothing but make banks richer. Financially smart people use credit cards strategically, not as a way to accumulate debt.
3. You need a six-figure salary to build wealth.
Earning a high salary definitely helps, but it’s not the only path to wealth. Plenty of high-income earners still live paycheck to paycheck because they don’t know how to manage money. At the same time, many people with modest salaries build wealth by saving, investing, and spending wisely.
The key isn’t how much you make—it’s how much you keep and grow. A disciplined saver earning $50,000 can end up wealthier than someone making $150,000 but overspending on a flashy lifestyle. Smart money management matters more than income alone, as stated by Hacker News.
4. You should pay off your mortgage as fast as possible.
It sounds smart—own your home outright and eliminate debt—but aggressively paying off a low-interest mortgage isn’t always the best financial move. If your mortgage interest rate is low, investing extra cash in stocks or retirement accounts could give you a higher return over time.
The key is balance. While being debt-free is great, locking up all your extra money in home equity means missing out on other opportunities. People with a high financial IQ consider the bigger picture instead of blindly rushing to pay off their house.
5. Budgeting means giving up fun and living like a monk.
Budgeting gets a bad reputation because people associate it with extreme frugality and no fun. But in reality, a budget is just a plan for where your money goes. It actually gives you more freedom by ensuring you have money for the things you truly care about.
Wealthy people don’t just spend without thinking—they budget strategically, directing money toward investments, savings, and experiences that matter. A smart budget doesn’t eliminate fun; it makes sure you can afford it without financial stress.
6. Investing is only for rich people.
The idea that investing is only for the wealthy is outdated. With apps like Robinhood, Acorns, and Fidelity, anyone can start investing with as little as $5. The real key to wealth isn’t starting with a massive fortune—it’s starting early and being consistent.
Time in the market is more important than timing the market. Financially savvy people know that even small investments grow significantly over time, thanks to compound interest. The sooner you start, the easier wealth-building becomes.
7. You should always save 20% of your income.
Saving is important, but blindly sticking to a “20% rule” doesn’t work for everyone. Some people may need to save more to reach their goals, while others might have periods where they can’t hit that percentage due to temporary expenses.
Instead of a fixed percentage, financially smart people focus on saving as much as realistically possible. The goal is progress, not perfection. Even if you can only save 5% right now, building the habit matters more than hitting an arbitrary number.
8. More income automatically means more financial security.
Earning more money can help, but it doesn’t guarantee financial security. Plenty of people increase their income only to increase their spending at the same time—a phenomenon known as lifestyle inflation.
True financial security comes from managing money wisely, not just making more of it. Smart earners focus on growing their assets, reducing unnecessary expenses, and avoiding debt traps, no matter how much they make.
9. You need to work harder to make more money.
Hard work is important, but working more hours doesn’t always lead to wealth. Many people work tirelessly but never get ahead because they’re trading time for money instead of finding ways to make money work for them.
Financially intelligent people prioritize working smarter. They look for passive income opportunities, invest in appreciating assets, and leverage skills or technology to earn more without grinding endlessly. Hard work alone isn’t enough—it has to be paired with smart strategy.
10. If you’re young, you don’t need to think about retirement yet.
Retirement feels far away when you’re in your 20s or 30s, but waiting to save for it is a massive financial mistake. The earlier you start, the more time compound interest has to work in your favor—meaning you can save less and still end up with more.
Financially savvy people know that even small contributions to a retirement fund early on can snowball into a comfortable future. Waiting until your 40s or 50s makes catching up much harder.
11. Debt is always bad and should be avoided at all costs.
Not all debt is created equal. High-interest credit card debt? Bad. A low-interest mortgage or student loan that increases earning potential? Not necessarily bad. The key is knowing the difference between good and bad debt.
Good debt is debt that helps you build wealth or improve your future, like investing in education, a business, or real estate. Bad debt drains your finances without adding long-term value. Financially smart people don’t fear debt—they use it wisely.
12. You should always follow traditional financial advice.
The financial world changes constantly, and what worked decades ago doesn’t always apply today. Relying only on outdated advice—like keeping all your money in a savings account or avoiding credit cards entirely—can hold you back.
Wealthy and financially intelligent people question conventional wisdom and adapt their strategies based on current opportunities. They educate themselves, stay open-minded, and adjust their approach instead of blindly following outdated money myths.