As you can imagine, I write, talk, and read a lot about money. It’s a huge interest of mine so naturally I come across some amazing stories, but quite often I hear some money myths over and over again that just aren’t true.

I have no idea where any of these money myths originated from, but what I do know is that people could be doing themselves a serious disservice if they take them as fact. Sure our lives are incredibly busy and really who wants to read up on money, but seriously, we need to fact check first.

Believing some of the following myths could do some serious damage to our financial well being so it’s time to set the record straight.

money myths busted

Money myths that hold no truth

Interest rates will stay low forever – Have Canadians been blessed or cursed by low interest rates? Who knows, but one thing that is sure to happen is that rates will eventually go back up, and when they do, many people will be in for a shock. The reason rates have been so low is because our economy is crap and the government wants us to spend. There’s nothing wrong with borrowing money at these rates but it has to be paid back eventually. The problem is, many of us are only able to afford a house or car because rates are so low– even a small rise in the rates could put a lot of us into financial ruin.

Houses will only go up in value – Canadian real estate is on fire! and with interest rates being so low, prices can only go up right? I have no idea what will happen with the housing market in Canada but what I do know is that there is no asset that only goes up price forever. Gold was the hot commodity a few years ago and has since seen a deep decline. Many also thought oil would go for more than $100 a barrel and yet now it’s closer to $70. There’s nothing wrong with owning real estate, I just wouldn’t recommend going all-in on it.

You can’t find quality items used – Many people still believe that buying new is the only way to go which I think is a bit silly. Obviously being the first owner has a certain appeal to some people, but there’s nothing wrong with buying second hand. According to Kijiji’s Second Hand Index, you could save close to $2,000 per year by buying and selling items on the second hand economy. I’ve personally bought and sold plenty of baby related items as well as collectibles and have saved a good amount of money.

Debt is a part of enjoying life – I have no idea when being in debt became sexy, but trust me debt is not a part of enjoying life. Okay so student debt and having a mortgage can be tolerable types of debt, but having consumer debt really shouldn’t be the goal for any of us. I get it, it’s really easy to get the things we want right away by charging it, but if we end up paying massive interest charges, what’s the point?

Cash is better than credit or vice versa – Psychologically we spend less when we use cash since we physically see the money leaving our wallets, but there’s plenty of people who are responsible with credit. But to be honest there’s no real right or wrong here, it really is just a personal preference. As long as our budgets are balanced every month, it doesn’t matter if we use cash or credit.

Contactless payments aren’t safe – Near field communications (NFC) or contactless payments have never been safer. Our credit and debit cards have built in security features making fraud pretty difficult these days. Don’t let those news stories about thieves stealing your information from 15 feet away scare you; it’s really not that easy to get all the info require to commit fraud.

There are risk-free investments with a good return – This is one of those money myths that just won’t go away. To be clear there are NO risk-free investments with a guaranteed good return. If someone promises us a high return with no risks, then it’s probably a ponzi scheme. If we want our portfolios to grow we need to accept a certain amount of risk, it’s just how investing works.

Travelling is expensive –  This couldn’t be further from the truth, we can travel anywhere as long as we have realistic expectations. If our vacation budget is limited then it probably makes sense to stick to staycations or destinations that are within driving distance. Even further destinations don’t need to be expensive if we’re smart with our budgets; we can use Airbnb to cut down on accommodation costs and there are travel fees we should avoid. Browse my travel section for more budget travel ideas.

Final thoughts

With these money myths busted, it’s time to get back on track. Be realistic about your money and take the time to educate yourself about personal finance. No one is going to care more about your money than you, so get out there and do something about it.

8 Comments

  1. Tonya@Budget and the Beach on August 31, 2015 at 2:52 pm

    I know so many people who are just plopping down their credit card blindly…in almost the same way someone who is overweight just thinks, “it’s just one more cookie, so what’s the big deal?” I’m already in debt/overweight. It makes me cringe to see someone in the hole continuing to dig because they want to appear cool or that money is no issue. As soon as you get over what people think of you, it’s a great first step in reversing that.

    • Barry Choi on August 31, 2015 at 2:59 pm

      Tonya,

      Ha funny that you mention cookies. Someone I know who constantly complains about debt also buys a $3 cookie every day.

  2. Hot Rod on September 1, 2015 at 1:22 pm

    I have found if somebody looks up the definition of debt they will find that it is not a good thing, the best kind of debt to have is the death of someone else as you.

    • Barry Choi on September 1, 2015 at 1:24 pm

      Hot Rod,

      Yes agreed, I don’t think there is any kind of good debt, there’s just tolerable debt.

  3. seattlegirluw on September 2, 2015 at 12:46 pm

    Given the ’08 downturn here in the U.S., it’s a pretty fair bet that values will keep climbing for awhile. Our house, which needs some work, appraised for $30,000 more than three years before. And that was last year.

    But no, values won’t climb forever. There will be downturns in the housing market. Other than rental property, I don’t think anyone should ever see a house as an investment. It’s a place to live that will eventually give you free rent. It’s something you can pass down to any kids you have. But it’s not something to bet on for turning a profit.

    • Barry Choi on September 2, 2015 at 3:08 pm

      In ’08 Canada wasn’t doing well either but our Government intervened when it came to housing and just drove prices up. We’re now at record high housing costs.

      With Canada now back in a technical recession, some home owners might be in for a shock.

  4. Mark on May 30, 2017 at 12:26 am

    Just a FYI you wrote travel feels instead of fees in one of the paragraphs

  5. Kyle @ NYPFGuy on December 11, 2017 at 7:16 pm

    Great point on travel. Many people in the PF don’t believe this too.

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