15 Common Myths About Saving Money (That Are Costing You Right Now)

Stop falling for these misconceptions and start saving smarter today.

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Updated May 28, 2024
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Misinformation can have a significant impact on our saving habits. It's time to dispel the myths that are quietly sabotaging your financial health so you can boost your bank account.

From everyday spending to long-term planning, we tackle 15 common myths about saving money that might be costing you right now.

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Cutting back on small expenses won't make a difference

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It's a common misconception that small spending adjustments won't impact your finances. However, when accumulated over time, seemingly insignificant expenses can significantly impact your budget.

For instance, daily coffee or dining out expenses can add up to substantial sums annually. Reducing these minor expenditures frees up funds that can be redirected toward savings or paying down debt, helping you get ahead financially.

Credit cards always lead to debt

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A prevalent misconception is that credit cards inevitably lead to debt. While reckless use can result in financial trouble, responsible credit card management can enhance your financial health.

Paying balances in full and on time can help you build a strong credit history, access rewards, and avoid interest charges, making credit cards a valuable tool for saving money when used wisely.

Renting is throwing money away

Monkey Business/Adobe for rent sign in front yard of house in street

Contrary to this notion, renting can be a financially sound decision. It offers flexibility, eliminates property-related expenses, and allows you to invest elsewhere.

Homeownership involves additional costs like maintenance and property taxes. Before buying, consider your financial goals and lifestyle to determine if renting aligns better with your current circumstances and long-term aspirations.

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Only high earners can save

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Saving isn't confined to high earners. Regardless of income, adopting mindful spending habits and creating a budget can free up funds for savings.

Even small, consistent contributions can accumulate over time, leading to financial security. The key lies in prioritizing saving and making intentional financial choices, irrespective of the size of your paycheck.

Spending on entertainment is frivolous

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While responsible budgeting is essential, labeling all entertainment spending as frivolous can be counterproductive.

Allocating a portion of your budget for leisure activities and entertainment is crucial for maintaining a balanced lifestyle.

Cutting out all discretionary spending can lead to burnout and negatively impact your overall well-being. It's about finding a healthy balance between financial responsibility and enjoying life's pleasures.

All debt is equal

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It's a misconception to treat all debts as identical. High-interest debts, like credit card balances, can quickly escalate and cost more in interest over time.

On the other hand, low-interest debts, such as mortgages, may offer opportunities for investment or tax benefits. 

Prioritize paying off high-interest debts first to minimize interest payments and make informed decisions about managing different types of debts.

It's okay to delay retirement savings

Andrey Popov/Adobe retirement plan on book

Delaying retirement savings is a costly mistake due to the power of compound interest. Starting early allows your money more time to grow, requiring smaller contributions for the same end goal.

Procrastinating can result in playing catch-up later with larger contributions, potentially compromising your financial security during retirement.

Begin saving for retirement as soon as possible to maximize the benefits of compounding and ensure a comfortable future.

Prioritize paying off debt over saving

gustavofrazao/Adobe circling the date with pay off debt

While reducing debt is important, ignoring savings can be detrimental. It's advisable to balance paying off high-interest debts and saving for emergencies and future goals.

Unexpected expenses can arise, and having savings prevents resorting to more debt. Simultaneously, saving while paying off debt cultivates financial discipline and safeguards your financial fitness in the face of unforeseen circumstances.

Budgeting is too restrictive

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Contrary to this belief, budgeting empowers financial freedom. A budget is a roadmap, ensuring your money aligns with your priorities and goals. 

It doesn't necessarily mean sacrificing all enjoyment; instead, it helps you make intentional choices.

Budgeting allows you to allocate funds for necessities and discretionary spending, ensuring you control your finances while enjoying life within your means.

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Investing is for experts only

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Investing isn't solely for professionals. With various user-friendly platforms and resources available, anyone can learn the basics and start investing. 

While some level of knowledge is essential, you don't need to be an expert to begin. Over time, you can expand your investment knowledge and gradually make informed decisions to grow your wealth.

High income guarantees wealth

Tyler Olson/Adobe wealthy woman stepping out of car

While a high income can provide financial comfort, it doesn't automatically ensure lasting wealth. 

Mismanagement of expenses, lack of savings, and poor investment choices can erode even substantial incomes.

Building and maintaining wealth requires smart financial choices, including saving, investing, and living within your means. 

Prudent financial decisions are crucial for achieving and sustaining true financial security regardless of your income level.

You can't save while paying off debt

Wicitr/Adobe banker making calculations

Though challenging, saving while managing debt is feasible and important. While prioritizing high-interest debt repayment is crucial, allocating even a small portion of your income toward savings prevents reliance on credit for emergencies.

Having a safety net safeguards you from accumulating more debt during unexpected situations. 

Striking a balance between debt reduction and savings contributes to financial stability and prevents setbacks in your journey toward financial freedom.

Investing is like gambling

Vitalii Vodolazskyi/Adobe notepad with words where to invest

While all investments carry risks, they also offer potential for growth and income.

Unlike gambling, investing is rooted in informed choices and can be a crucial tool for building wealth and achieving financial goals with calculated decisions.

Diversification, understanding your risk tolerance, and investing for the long term are strategies to mitigate risks.

Bulk purchases are always cost-effective

Sarah Rypma/Adobe Grocery cart with toliet paper and some food items  with other grocery items in background at a Costco in Kalamazoo, Michigan

While buying in bulk can save money on some items, it's not always the best strategy. Perishable goods might go to waste, and tying up funds in excess products can outweigh the savings.

Evaluate whether you'll realistically use all the items before they expire or become obsolete. Additionally, consider storage costs and potential changes in preferences. 

You can help avoid wasteful spending by always making a list before going to the grocery store.

Emergency funds are unnecessary

maew/Adobe emergency fund

Believing you won't face unexpected expenses can be costly. Emergency funds provide a safety net during unforeseen circumstances like medical bills or job loss. Relying on credit cards or loans in emergencies can lead to debt accumulation.

Building an emergency fund is a proactive step to protect your financial well-being and prevent derailing your financial goals due to unexpected financial shocks. 

It's an essential component of a solid financial plan. Even saving just $50 a month in a high-yield savings account is a good start.

Bottom line

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Are you avoiding saving money? Don't let these myths continue to cost you money — take control of your finances and set yourself on a path to grow your wealth.

By debunking these 15 common myths about saving money, you gain the knowledge needed to make informed financial choices. 

Author Details

Adam Palasciano

Adam Palasciano is a personal finance-obsessed and money-savvy individual who loves to hash out content on all things saving money. He specializes in writing millennial-friendly personal finance content, covering topics ranging from trending financial news, debt, credit cards, cryptocurrency, and more.