While a great deal of financial advice is helpful, there are several money ‘myths’ that you need to be aware of. As finances are essential parts of our lives, it is important to know what advice to follow.

If you are ready to know what “money advice” is best to ignore and the methods you should use instead, this article will change your financial game.

I, like many millennials, went to college right out of high school, and now I’m 28 years old with over $200,000 in debt. I wish a lot of the financial literacy education that is available today existed in my teens/early 20’s. I only got into financial literacy the last year or so. I’m happy that I used the extra COVID time to educate myself, and it’s already started paying off. I read the famous “Rich Dad, Poor Dad” and took Dave Ramsey’s “Financial Peace University”. I started investing and paying off my credit card debt. I even started my own business. I’ve learned a lot in the last year, and this article shows the fruits of my labor.

Here are four common ‘money myths’ and their horrible advice on how to handle your money.

You must avoid debt: Unrealistic money advice

We hear this phrase of debt often, and people usually portray it in a bad way. However, avoiding debt is unrealistic in many ways. Being in debt is usually related to educational costs or even major purchases like buying a house. In fact, the majority of United States citizens are in debt.

I was stuck in the common but unfortunate situation of paying for college entirely out of pocket, and I had to compensate for that by taking out loans. I went to undergrad, law school and grad school. I have a mountain of debt and top-notch education that wouldn’t have been possible without it.

The high percentage of Americans in debt suggests that avoiding debt (at some point or another) is almost impossible. Even though it is obvious that debt is a pretty common thing, it is also something that everyone is afraid of — even when they are in it. Some people want to avoid debt at all costs, which is a difficult pursuit. It is possible, but not necessarily realistic, money advice.

This idea of ‘avoiding debt’ really puts people into a scarcity mindset. When we think of someone being in debt, we think of shoppers buying designer handbags or other unnecessary services. However, this is not the type of debt that most people have.

Instead, many people need to take out student loans to complete their college education. Although this puts them in debt that they have to pay off later, it is still an investment in their professional future. Once they get the type of job that they were studying to have, they will be able to pay off that debt in the future.

As long as the debt you accrue brings you closer to accomplishing your goals, it is not necessarily bad to be in debt.

Presumably, you can pay off these various debts later. Therefore, telling people to avoid debt is limiting their potential future.

You need to go into debt: Equally poor advice

Now that we have debunked the idea that you must avoid debt, we can compare the similarities between that idea and the money suggestion that you need to go into debt. Here, “money advice” suggests that you must go into debt. You likely hear this in the ways we mentioned above. In other words, you must go into debt because it is beneficial to your future investments.

However, some people are not in debt. There are far fewer people without debt than those with it. Nonetheless, going into debt is not something that appeals to everyone. Even if the debt is for a good cause, or rather, useful in future investments — that does not mean we must go into debt.

What I wanted out of my future isn’t something that even required going into debt. Unfortunately, life had many surprises for me, and I was never able to finish law school. The student loan debt I may spend the rest of my life paying is going to be difficult to come out from under because of a lack of a law degree.

If you are not sure about going into debt for student loans, house payments, or car payments, don’t. You should not do anything with your money that makes you uncomfortable. Sometimes, taking risks pays off, but at the end of the day, you need to trust your gut when it comes to these decisions.

You need outstanding credit: False money advice

For some reason, this myth has been going around for a while. Almost every adult has said it, and we hear it time and time again as young women. However, it hurts your credit to have an outstanding balance on your card. While you may have heard that it is important to let some interest build up, that is not the smartest path.

I got my first credit card at 18 years old and made sure to pay it off every month, but as life got more complex and expensive, I was unable to do that, which negatively affected my credit score.

Paying off your card in full helps your FICO score and offers good money adviceAdditionally, you have to pay more money in interest when you have outstanding credit. It is not beneficial, then, to even have outstanding credit. It is not even useful “money advice” at all.

If you’d like to know more about credit cards, check out our article on How to Get a Credit Card and Build Credit in Your 20s.

As you will see below, credit cards are useful when you have the money to back them up. Therefore, you need a clear idea of the money you have coming in and your spending. You can budget on a daily, monthly, or even yearly basis. Regardless, it is important to see your income and prioritize what you spend your money on.

Credit cards are dangerous

The idea that credit cards are viewed as dangerous is one of the most common topics we hear about in finances. However, the worries about credit cards stem from a ‘myth.’ Credit cards are considered dangerous because it gives purchase power to irresponsible subjects.

When used correctly, I increased my credit score by paying off my credit cards each month. It wasn’t until I was unable to do that that my debt got out of control.

Credit cards are not dangerous in themselves. Rather, the wrongful use of them — perhaps in maxing out your card or making crazy purchases — is what determines the danger of credit cards. If you use credit cards the right way, they will be beneficial for you. In many cases, you need to have a solid credit score to attain what you need.

The bottom line is: do not use your credit card to spend money you do not have.

As long as you make sure that you have the cash to back up or later pay off your purchases, credit cards aren’t dangerous at all.

But, if you are super scared of credit cards, take it easy. You can start building a healthy relationship with credit cards through basic purchases like gas and groceries. Then, pay off the bill right after. Just ensure your credit card is not being used for quick purchases that you can not afford.

The financial world is so hard to navigate. There are so many common misconceptions about money, and it is easy to feel overwhelmed. However, if we stop assuming all “money advice” is helpful, we can take back our power over money.

Are you interested in reading more about how to benefit from money?