9 Money Myths That Could Derail Your Finances in 2025
Money advice is everywhere — from TikTok clips to coffee chats with friends to well-meaning relatives passing down “rules” they swear by.
But here’s the truth: not all of it holds up today.
As we head deeper into 2025, the financial landscape is shifting fast thanks to new tech, economic uncertainty, and evolving societal norms. That makes it more important than ever to separate fact from fiction when it comes to your money.
Many of us were raised hearing so-called financial “truths”:
👉 Renting is a waste of money.
👉 Carrying a credit card balance builds your credit.
👉 Investing is only for rich people.
These beliefs are so common they almost feel like gospel — but they can quietly sabotage your finances if you follow them blindly.
This article is here to help you cut through the noise. Let’s tackle nine common money myths and show you how to take control of your financial future with clarity, confidence, and smart moves.
💸 Myth 1: Carrying a Credit Card Balance Boosts Your Credit Score
The belief: Keeping a balance on your credit card improves your credit score.
The truth: This one costs people money every day. Carrying a balance leads to interest charges and can actually hurt your credit score.
Your score hinges in part on credit utilization — the percentage of your available credit you’re using. High balances make you look riskier to lenders. The best move? Pay off your full balance each month.
✅ Takeaway tip: Use automatic payments or reminders from budgeting apps to ensure you pay in full and on time.
🏠 Myth 2: Renting Is Throwing Money Away
The belief: Renting is a waste — you should always buy a home if you can.
The truth: Renting offers flexibility and can sometimes be the smarter financial choice. Homeownership comes with big-ticket costs like maintenance, property taxes, and insurance. If you’re not planning to stay put for at least 5–7 years, renting may save you money.
✅ Takeaway tip: Use rent vs. buy calculators to compare costs in your area and weigh them against your lifestyle plans.
📈 Myth 3: Investing Is Only for the Wealthy
The belief: You need a fat bank account to get into investing.
The truth: Thanks to fractional shares, micro-investing apps, and no-minimum investment platforms, anyone can start investing today — even with just a few dollars. And starting small now lets you harness the power of compound growth over time.
✅ Takeaway tip: Explore beginner-friendly investment apps that help you dip your toes in while learning the basics.
👵 Myth 4: You Should Avoid All Debt in Retirement
The belief: Heading into retirement with any debt is a financial disaster.
The truth: Not all debt is bad debt. A low-interest mortgage, for example, might make sense if it preserves your cash flow or allows you to invest in higher-return opportunities.
✅ Takeaway tip: Sit down with a financial advisor to review your retirement plan and decide which debts to prioritize (and which you can comfortably carry).
👔 Myth 5: You Can Always Work After Retirement
The belief: If money gets tight, you can just pick up a part-time job after you retire.
The truth: Relying on post-retirement work is risky. Health issues, caregiving needs, or age discrimination can limit your options. A solid retirement plan needs to stand on its own.
✅ Takeaway tip: Check in on your retirement savings regularly to make sure they match your future lifestyle goals — and adjust when needed.
💼 Myth 6: Borrowing from Your 401(k) Is a Safe Option
The belief: Borrowing from your 401(k) is like borrowing from yourself — no harm done.
The truth: A 401(k) loan comes with strings attached. If you leave your job, you may have to repay it quickly or face taxes and penalties. Plus, you lose out on potential investment growth while the money is out.
✅ Takeaway tip: Exhaust other funding options first — like personal loans or tapping your emergency fund — before touching retirement accounts.
📃 Myth 7: Life Insurance Is a Good Investment
The belief: Life insurance policies can double as investment tools.
The truth: While some permanent life insurance products include investment components, they often come with higher fees and lower returns compared to traditional investment accounts.
✅ Takeaway tip: Focus on term life insurance for straightforward protection, and keep your investments separate for better growth potential.
🕰 Myth 8: You Should Take Social Security at 62
The belief: It’s always smartest to claim Social Security as soon as you’re eligible.
The truth: Claiming early permanently reduces your monthly benefit. Waiting until full retirement age — or even later — increases your payments.
✅ Takeaway tip: Use an online Social Security calculator to weigh the pros and cons of claiming at different ages based on your health, lifestyle, and financial needs.
💵 Myth 9: You Can’t Build Wealth on a Low Income
The belief: You need a high salary to build wealth.
The truth: Wealth comes from what you do with what you have. Smart budgeting, consistent saving, and long-term investing can create real financial growth, even on modest earnings.
✅ Takeaway tip: Build a budget that prioritizes saving and debt payoff, and take advantage of free financial literacy tools to sharpen your money skills.
✨ Final Thoughts
The biggest financial mistake you can make in 2025? Clinging to myths that no longer serve you.
When you challenge old assumptions, stay informed, and make intentional decisions, you set yourself up for lasting success — no matter your starting point.
