10 Financial Fallacies That Are Keeping You Broke

Fallacy 1: I Don’t Earn Enough to Save

The truth is, saving isn’t about how much you earn, but about how you manage what you earn. Even if your income is low, developing a habit of saving even a small amount regularly can add up over time.

Fallacy 2: It’s Too Late for Me to Start Investing

It’s never too late to start investing. While it’s true that starting early can lead to greater returns due to compound interest, starting late is still better than not starting at all.

Fallacy 3: I Can Rely on Social Security for Retirement

While Social Security can provide a base of income, it’s generally not enough to cover all your expenses in retirement. It’s crucial to have other sources of income, like retirement savings or investments.

Fallacy 4: I Should Pay Off All Debt Before Saving

While it’s important to pay off high-interest debt, it’s equally important to save for emergencies and your future. A balanced approach is usually best.

Fallacy 5: Renting is Throwing Money Away

Homeownership isn’t right for everyone. Renting can provide flexibility, and it’s not necessarily wasting money if it suits your lifestyle and financial situation.

Fallacy 6: I Don’t Need a Budget

Budgeting is essential for understanding where your money goes and ensuring your expenses align with your priorities. It’s a tool to help you control your money, not the other way around.

Fallacy 7: I Need to Have a Lot of Money to Invest

Thanks to micro-investing apps and robo-advisors, you can start investing with a small amount of money. It’s more about getting into the habit and letting your money grow over time.

Fallacy 8: I Should Keep All My Money in a Savings Account for Safety

While it’s important to have a cash reserve for emergencies, keeping all your money in a savings account means you’re likely losing money over time due to inflation. Diversified investments can provide higher returns.

Fallacy 9: Credit Cards Are Bad

Credit cards are a tool. When used responsibly, they can provide benefits like purchase protection, rewards, and help build credit history. The key is to pay off your balance in full every month to avoid interest charges.

Fallacy 10: Money Can’t Buy Happiness

While it’s true that money itself can’t buy happiness, it can provide security and open up opportunities that can contribute to happiness. It’s all about how you use it. Financial wellness isn’t about amassing wealth, but about using money as a tool to live a fulfilling life.

Recognizing and challenging these fallacies can empower you to take control of your financial future and make decisions that support your financial wellness.


  • Lily Kensington

    Lily Kensington is a financial psychologist, a proud member of the ANZA Psychological Society, and a passionate advocate for financial wellness. A former high school English teacher and psychology graduate, Lily brings a unique perspective to her writing that blends the intricacies of psychology with the world of finance.Over the past decade, Lily has dedicated her life to helping individuals and couples navigate their emotional relationship with money. Her empathetic and intuitive approach, honed through her counselling practice, breaks down complex financial concepts into relatable and practical advice. Lily's writing often reflects her personal journey as a single mother, providing valuable insights and support for fellow single parents navigating the world of personal finance.In addition to her numerous contributions to wellness and personal development blogs, Lily is the author of the book "The Heart of Money: A Psychological Guide to Financial Wellness."In front of the camera or behind the pen, Lily's mission remains the same: to help others achieve financial peace by understanding the psychology of money.

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