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Finance Myths, Busted

Unraveling the misinformation

Part 7 | Reading Time: 5 minutes
By Ian Bin
Hey there! We’ve all heard those tales about finance that make you raise an eyebrow and go, “Really?” There’s no shortage of myths out there, but fear not; I’m here to separate fact from fiction. So, feel free to relax, and let’s dive into the mysterious world of finance myths, shall we? It’s time to bust some myths wide open!

Debt is always wrong

Whenever someone mentions debt, typically the first thoughts that get brought up are of bankruptcy or defaulting on credit cards. However, taking advantage of borrowing for opportunities like higher education or buying a home can be considered an investment in your future. Even though this can cause you to take on more debt, in society it is viewed as positive. For example, going to college can lead to a higher earning potential, ultimately outweighing the initial debt (remember trade schools also provide great earning potential without the need for expensive tuitions). Mortgages are another prime example – they’ve been crucial in helping many people build wealth over the years by helping them regain their initial investment and build up equity.

Evidence supports this too. Research shows responsible borrowing helps one develop and maintain a good credit history; it enables people to secure better interest rates or loan terms when they borrow in the future, and in the long term, helps reduce financial risks or financial difficulties.1

Of course, excessive debt and high interest can still be detrimental. But not all debt is created equal. Responsible borrowing and a solid plan to manage and repay the debt can be a good move toward your financial goals. So, while it’s essential to be cautious about the type and amount of debt you take on, it’s also important to recognize that debt isn’t always a one-way ticket to financial ruin. It’s all about understanding the terms, managing your obligations, and using debt as a tool to reach your long-term aspirations.

You need a financial advisor to make any good financial decision

Let’s chat about the idea that you need a financial advisor for any intelligent money move. While financial advisors can be helpful, they’re only sometimes a necessity. Here’s why: Many financial decisions are within your grasp. You can understand concepts like budgeting, saving, and basic investing with some research and time. In previous blogs, I covered the basic concepts of budgeting and saving money. I have also talked about the 3Nickels app, as it provides tools on budgeting, debt payoff, car buying, and more with educational courses that can guide you.
financial advisor in your pocket home screen
Sure, financial advisors bring expertise, but it’s essential to know that there are other sources you can look to. Financial advisors are often expensive, and if your financial situation is relatively straightforward and you are just starting, it is likely you can handle things yourself. Also, remember that not all financial advisors are equal. Some might have your best interests in mind, while others might be more interested in their commissions. You have to ask questions.

Evidence-wise, studies have shown that individuals who educate themselves and take control of their finances tend to plan their finances better in the future.2 Learning about basic economic principles and staying informed can go a long way in securing your financial future. So, while financial advisors can be great allies, you have the power to make intelligent financial choices on your own too. It’s all about finding the best balance for you and your unique situation.

A higher income means better financial health

I understand why you may think that a bigger paycheck might solve all problems. But hang on a sec! Imagine you have a friend who makes a lot but spends just as much or even more. They might have a higher income, but if they don’t manage their money wisely, they could still end up in debt or struggling to make ends meet. People who earn more often tend to spend more, which can lead to a cycle of lifestyle inflation. Lifestyle inflation, aka lifestyle creep, refers to an increase in spending when an individual’s income rises. As their available funds increase, so do their expenses and obligations—sometimes disproportionately.3
As a result, lifestyle inflation can cause people to be in worse financial shape even though they earn more money. It’s not uncommon to see folks with substantial incomes still facing financial stress due to high expenses. Consider someone with a lower income who’s diligent about budgeting, saving, and making sound financial decisions. They might not have a huge paycheck, but careful management can lead to better financial stability and less stress. So, while a higher income can certainly provide more options, it’s only part of the picture. How you manage and make the most of what you have genuinely matters. Your financial health combines income, spending habits, saving strategies, and decisions aligning with your goals.

Credit cards should be avoided

We have all heard horror stories about people who get a credit card and just purchase and purchase, ignoring that they must pay that back. And if they don’t, they get hit with high interest rates and, with that, a mountain of debt. But credit cards, if used responsibly, do offer benefits.

First, they offer convenience and security for online purchases. Plus, they can help you build a strong credit history, which is crucial for getting a car loan, renting an apartment, or even getting a mortgage. Responsible credit card use ensures you are paying your credit card off before interest begins to accrue, which can improve your credit score. When you make consistent, on-time payments and keep your credit utilization low, you demonstrate reliability to creditors. Those who use credit cards responsibly and don’t maintain outstanding balances typically save $300 to $400 annually.4

Credit cards often come with perks like cashback rewards or travel points. These benefits can add up over time, giving you a little extra buying power. Of course, it’s essential to be cautious. Overspending or carrying a high balance can lead to high-interest debt. But with proper budgeting and discipline, credit cards can be a valuable tool that contributes positively to your financial life. So, instead of avoiding credit cards altogether, consider using them as a tool for building credit, earning rewards, and adding an extra layer of security to your transactions. Just remember, responsible use is the key to reaping the benefits!

Finishing the financial folklore

Well, there you have it, finance myths, busted! We’ve taken a journey through finance myths, and it’s safe to say we’ve had a blast unraveling the truth behind some of these curious tales. Remember, it’s also essential to keep our financial wits about us. So, remember what you have learned, and share the real deal. Keep your wallets wise!


1 “Responsible Borrowing: A Path to Financial Stability and Wellness.” Stanbic Bank Ghana, 31 July 2023,
2 Strömbäck, Camilla, et al. “Does Self-Control Predict Financial Behavior and Financial Well-Being?”  Journal of Behavioral and Experimental Finance, vol. 14, 2017, pp. 30–38,
3 Folger, Jean. “How to Manage Lifestyle Inflation.”  Investopedia, 13 July 2022,
4 Emily_Lorsch. “Why You Should Buy Everything with Credit Cards – Provided You Meet 1 Condition.”  CNBC, 14 Mar. 2023,

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