The Common Financial Myth That Can Be Damaging to Your Wealth
“I’m just not good with money” is tossed around like a bad horoscope, a shrug at every bounced budget or maxed-out card. However, the idea that we’re born with a “money type,” a natural spender or a natural saver, is one of the biggest myths holding people back from building real wealth. It sounds harmless, but it convinces people they can’t change their habits. Money behavior is learned, and anything learned can be re-learned.
Why “Money Types” Don’t Exist
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Journalist Frances Cook calls this mindset one of the most damaging money myths. Our financial behavior isn’t tied to personality but shaped by experience. Someone who overspends might be seeking comfort or control, not acting out of carelessness. Someone who avoids checking their accounts might not be lazy but anxious. These habits form through repetition and emotion.
Most money beliefs start forming before age eight, shaped by what we saw growing up. Maybe your parents stressed over bills, so you now cling to every dollar. Or they celebrated with shopping, so you do the same. Once you see where those habits come from, you can decide if they help or hurt you. Understanding your past with money enables you to rewrite your financial future.
The Myth Of The Perfect Budget
Budgeting is often viewed as the ultimate path to financial success, but writer Katharine Paljug and the Healthy Rich team challenge this notion. They argue that “you need a budget” can do more harm than good. Constantly tracking every expense often creates guilt and stress, and pushes people into a splurge-and-restrict cycle similar to dieting.
Budgets also focus on small purchases, like coffee or takeout, while ignoring larger financial levers such as raising income, refinancing loans, or reducing fixed costs. And the “wants vs. needs” idea only adds confusion. A meal out might seem like a want to one person but a necessity for another who’s balancing work and family.
Debt Myths That Keep You Stuck
Debt myths are just as damaging. One common one is that carrying a credit card balance helps your credit score. It doesn’t. Credit scores reward responsible use, not interest payments. You can have excellent credit and still pay your balance in full every month. Believing otherwise can cost you hundreds of dollars a year in needless interest.
Another mistake is assuming that making minimum payments means progress. They prevent late fees, but they won’t get you out of debt. With rates above 22%, paying the minimum on $10,000 could take decades to clear, with most of the money going toward interest. Closing old cards is another habit that backfires. It reduces available credit and shortens credit history, both of which can lower your score. Keeping older, fee-free cards open and using them occasionally can actually strengthen your credit profile.
Changing The Money Story
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Psychologist Dr. Brad Klontz says humans naturally prefer short-term comfort over long-term rewards. That’s why the first step to fixing money problems is to restore the mindset behind them. Automating savings, setting simple goals, and celebrating small wins can build better habits faster than relying on willpower alone.