6 Money Myths That Kept Me Broke for 20 Years

For the first forty years of my life, I thought I understood money. I thought I was doing it right.

But as it turns out, my understanding of money wasn't entirely my own—society had already done much of the shaping. And wouldn't you know it, pretty much none of it was true.

These things I believed about money turned out to be money myths. They were lies. Misconceptions. Bad financial advice passed down as common sense.

And they're insidious. They don't announce themselves. They don't show up as bold proclamations. They just… hum in the background. Money myths linger like a shadowy fog, shaping how you see personal finance without you even realizing it. You don't question them because there's nothing visible to question.

It's just… the way things are. (Until you know better.)

And before you know it, they've settled in. They're guiding your financial decisions and shaping your assumptions—until one day, you wake up and realize your financial situation has been shaped by beliefs you never questioned.

I bet you'll recognize some of them. So let’s question these myths and then try a better way. 

Money myth #1: "I'll always have a car payment"

Everyone has a car payment, right? “Only rich people pay cash for cars.” That's what I believed for decades.

This myth kept me locked in a cycle I didn't even recognize. As soon as one car loan was paid off, it felt natural—almost inevitable—to roll right into the next one. After all, cars break down, and you need reliable transportation. The monthly payment just became part of my money management landscape, as permanent as rent or utilities.

But here's what I couldn't see: that permanent car payment was stealing my choices. Every month, hundreds of dollars were spoken for before I even got paid. Money that could have gone toward dreams, an emergency fund, or simply breathing room was already committed to something that was losing value every single day.

And here's the encouraging truth: you can absolutely pay cash for a car if you want to. YNABers all over the world have done it (and they have the YNAB license plates to show for it!) You don’t have to, but it’s possible. With time and intention, you can build up enough to consistently buy reliable used cars without taking on new credit card debt or personal loans. It might feel out of reach now, but it starts with one decision, one savings account target, one step. 

‍For more on goal setting, check out my blog, You Can Do Big Things!

Money myth #2: "Credit cards are for emergencies"

This one felt so responsible, so mature. Credit cards weren't for frivolous spending—they were my safety net and for building credit. And if I carried a balance because of a legitimate emergency? Well, that was just responsible adulting. 

Wrong.

What I didn't realize was that using a credit card for emergencies meant I was always one crisis away from credit card debt. Instead of building a real emergency fund with actual money, I was outsourcing my financial security to Visa and MasterCard. And that "responsible" balance I carried? It wasn't improving my credit score as much as it was improving their profits.

The better approach? Ask yourself: "What larger, less frequent spending do I need to prepare for?" Car repairs, medical bills, home maintenance, job loss—these aren't surprises, they're inevitable. Instead of waiting for them to happen and then scrambling to find the money, you can set aside small amounts each month in your plan. Think of your YNAB categories as small-super specific savings accounts rather than one large nondescript emergency fund.  

‍Check out our Simplify Your Finances guide for more ways to streamline your accounts.

Money myth #3: "If I can afford the monthly payment, I can afford it"

This is how I bought my first house and first new car. If the monthly payment fit my income, the decision was made. Simple, right?

This myth is particularly dangerous because it feels so logical. But it completely ignores the total cost, the opportunity cost, and the long-term impact on your financial flexibility. It reduces every major financial decision to a single question: "Can I squeeze this payment into my monthly budget?"

The problem? When you're always asking, "Can I afford the payment?" you're never asking, "Is this the best use of my money?" or "What am I giving up to make this payment for the next five years?" You’re not thinking about compound interest, or how those payments affect your ability to build wealth.

That's why we emphasize the importance of having a plan for all your money. With a plan in place, you can weigh the trade-offs before making a financial decision. Instead of asking, "Can I afford the monthly payment?" you'll start asking, "Am I willing to give up other priorities for this new expense?" Now you're thinking in terms of opportunity costs, trade-offs, and what matters most to you. 

Money myth #4: "No normal person can pay down a mortgage early"

That's why we have 30-year mortgages, I reasoned. Houses are expensive, and 30 years is just how long it takes normal people to pay them off. Only the wealthy could afford to pay extra toward their mortgage.

This myth kept me from even considering paying extra toward my mortgage. Why would I? I wasn't rich, so extra payments weren't for people like me. The 30-year timeline wasn't just normal—it was inevitable.

But what if it wasn't? What if those extra years of payments weren't just "the way it is" but actually a choice I was making by default?

Again, I'm not saying that everyone should pay extra on their mortgage. But it should be on the table. If it fits within your plan, if it is a high priority for you, it's possible to work toward living a mortgage-free life.

Money myth #5: "If you pay your bills on time, you are good at money"

As the responsible oldest child that I am, I paid my bills on time. Surely, I must be doing everything right.

This myth is seductive because it sets such a low bar for financial success. Don't bounce checks, pay the minimums, stay current—and you're "good with money." It felt like an achievement, but it was really just the bare minimum.

Paying bills on time is important, but there's so much more. Deeper financial wellness comes from more than paying bills on time. It come from being intentional with your money—creating a plan, staying aligned with your goals, and making sure your money is actively supporting the life you want to live.

Money myth #6: "You need a LOT of money to reach big financial goals"

…And I will never have a lot of money. I'm not sure I even knew what "a lot of money" was, other than more than I had.

This belief was perhaps the most limiting of all, because it shut down my imagination before it could even get started. Why dream about financial goals when you "know" you'll never have enough money to achieve them? Why even think about what you might want when you've already decided it's impossible?

This myth kept me small. It kept my goals small. It kept my vision of what was possible embarrassingly small.

The lightning bolt moment

These money myths weren't always haunting me as conscious thoughts. I had just embraced them as the way it was.

Until the day everything came crashing down.

I had just bought a house that needed updating. I had some cash from selling my previous home, so I started renovations, feeling confident that I had the money to make it work. But then the cash ran out. And I wasn't done.

So, I did what seemed reasonable: I charged the rest. I had to finish, so I just kept swiping the credit card, convincing myself it wasn't a big deal. After all, I'd pay it off quickly once the work was done. That was the plan.

And when the work was done, I sat down one day, added up the numbers, and realized I was underwater.

In that moment, every financial belief I had came crashing down.

I thought I was making smart choices. I thought I understood what I could afford. I thought credit card debt was something I could manage.

But the beliefs that I thought were a strong financial foundation were actually built on quicksand.

What I thought was "smart" debt—the kind I could handle, the kind I could pay off easily—turned out to be an anchor. One that was going to weigh me down for years.

And this was one of the best worst things to ever happen to me.

Why these myths hold you back

These beliefs, these myths, hold you back in three critical ways:

First: They keep money as this separate, external thing in your life. A thing that "happens to you." Sometimes what happens to you is good, sometimes it's bad, but you're not really in control.

Second: They can lead you to believe that money doesn't matter as much as it does. But here's the truth: money affects literally every other aspect of your life.

Money may dictate whether you decide to go to college, where you decide to go to college, and thus perhaps who you will date, marry, and hopefully spend the rest of your life with.

Money may dictate what you study, where you live, which friends you surround yourself with. It influences your hobbies, your health decisions, your charitable giving. Yes, money may dictate just about every single decision in your life.

The way you spend your money is the way you live your life.

‍Third: If you don't give money the weight it deserves, you are limiting your own imagination. You are limiting your options in life. You are a lesser version of yourself, of who you could be.

The path forward: better questions, better decisions

There at the kitchen table crunching numbers that I knew would never add up, I came to a new realization. What I needed was a better way to make decisions. My decision-making process was faulty: Is there money in the bank account? Is there room on the credit card?

Well, that's how you spend all the money in the bank and charge to the limit on the card. I mean, if those are the questions you're asking, you shouldn't be surprised by the results.

I needed better questions.

That's why we teach the Five Questions. They're a better way to make financial decisions by helping you give every dollar a job:

What does this money need to do before I’m paid again?

Get clear on your current spending. Set money aside for the most pressing needs first so you don't spend important money on less important things.

What larger, less frequent spending do I need to prepare for?

Turn those big non-monthly expenses into monthly subscriptions by setting a little aside for them regularly. From car repairs to birthdays to your annual credit card renewal fee—future you will thank you.

What can I set aside for next month’s spending?

This is the dream: starting the month with all expenses covered by money already in your bank account. How much more time and energy would you have if you didn't have to worry about timing and cash flow issues?

What goals, large or small, do I want to prioritize? 

Who do you want to become? What are your dreams, hobbies, and passions? How can your money reflect that?

What changes do I need to make, if any?

There’s no “normal” month. A flexible plan lets you pivot while considering all of the trade-offs right in front of you. That’s how financial planning fits real life.

Ask yourself these questions over and over again every time you get paid, and your priorities will become crystal clear. Then, you’ll start making real progress! 

It starts to feel, dare I say—fun?

What's missing from your life?

Here's what I've learned: if we're not using our money to build a life we actually want, what's the point of working so hard to earn it?

So let me ask you: What's missing from your life?

What's something you wish you could make happen, but haven't yet? 

Maybe it's a trip you keep putting off, a hobby you've always wanted to pursue, or a financial goal you've been too afraid to name. Maybe it's something small, or maybe it's something big enough that you can't quite see how to make it real.

Whatever it is—give it a home in your spending plan. Name it. Make it real. Give it a place in your financial life.

Because personal finance isn't just about covering expenses. It's about improving your well-being. It's about making life better.

These common money myths I believed for forty years weren't just wrong—they were stealing my possibilities. They were keeping me from asking better questions, making better decisions, and building the life I actually wanted.

But once you start questioning those myths? Once you realize that the "way things are" isn't the way things have to be?

That's when the real possibilities begin.

Break free from the money myths holding you back. Try YNAB free for 34 days and start building a financial life that reflects your real priorities.