Is everything you know about money wrong?

Myths about money are everywhere. Unfortunately, much of what you know about money is probably wrong and holding you back from success in your financial life. We all must be aware of how our thoughts impact our behaviour with money. As we all know, how you think and feel often dictates how you’ll act.

We truly are living in the age where we have access to information 24 hours a day, seven days a week. You want enough information to inoculate yourself against financial missteps, but not so much that it leads to behaviours that undermine your financial success.

To help you on your way to your financial dreams, here are five of the most common money myths debunked.

  1. “Money doesn’t grow on trees”

Many of our parents drove this concept into our heads from a young age, and if they did so after 1999, then technically they’d be correct. This is because it was 1999 when New Zealand switched to plastic bank notes.

However, most money across the globe is still made of some sort of paper. In fact, the most widely used currency, the United States Dollar, is made of cotton – which is picked from the cotton bush – and so is therefore near enough to growing on trees!

  1. “Money won’t make you happy”

To help debunk this myth, here are a few comments from celebrities you may have heard of:

  • Samuel L. Jackson – “Anyone who tells you money can’t buy happiness never had any.”
  • Ariana Grande – “Whoever said money can’t solve your problems. Must not have had enough money to solve them.”
  • Robert De Niro – “Money makes your life easier.”

As if that’s not enough, a great deal of research has shown that people with more money are typically happier than those with less. Additionally, research has proven that spending on others actually increases happiness too.

  1. “All debt is bad.”

Many people do not know the difference between good debt and bad debt. In fact, many do not know that good debt exists at all. There are many examples of good debt.

Good Debt

The conventional wisdom goes something like: debt that is backed by appreciable assets, such as property, is usually good. This is because the property will typically generate an income which can help pay some or all the debt – with rent, and likely increases to the property’s value over time. Debt that will likely help someone generate more income — such as a student loan so that someone can become a doctor — is usually also good. In this way, debt is as a tool that enables a person to advance financially, in a way that would not be possible without it. That means it is good debt.

Bad Debt

Meanwhile, debt that is backed by a depreciating asset, such as a car, is bad. This is because the value of a car nearly always depreciates over time. Revolving debt, such as credit card debt, is also bad. These sort of bad debts nearly always prevent financial growth.


Of course, there are always exceptions to the rule. For example;

  • A huge student loan possessed by someone with limited employment prospects. This could still be described as bad debt, or
  • Someone who takes out a small loan to buy a simple and economical car so they can get to-and-from a high paying job. Many people would describe this as good debt, as the car will help the person earn much more than without it.

However, the point remains that all debt is not necessarily bad.

  1. “Money is the root of all evil.”

This saying can be a sensitive one, as the origins of the phrase are from the Bible, where Timothy 6:10 begins “The love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows” For unknown reasons, people began omitting the words “love of”, meaning the phrase is both technically and practically incorrect.

To avoid any doubt, of course we’d never encourage greediness, but it’s worth remembering that even activities such as, helping others at scale usually takes a lot of funding. This could be to build a hospital or orphanage, to build schools and institutions, to establish charities and so on.

  1. “It takes money to make money.”

This is just outright incorrect. In fact, this little phrase is one of the biggest and most dangerous sayings out there, as it can be a convenient excuse to simply not try to succeed. It takes nothing other than a basic job and filling in the sign-up form for KiwiSaver to become an income-earning investor.

Even the wealthiest people in the world had to start somewhere: Steve Jobs founded Apple in his mum’s garage, Oprah Winfrey was terribly poor and ran away from home as a teenager, the founder of Starbucks grew up in a housing complex for the poor, and (though we try and avoid politics) Barrack Obama’s first job was scooping ice cream. Closer to home, John Key grew up in a state house before working his way to the NZ rich list, then later giving his entire prime ministerial salary to charity.

That said, sometimes younger people are daunted by the financial challenges ahead and may say things like this. As such, it pays for young people to keep in mind that most people don’t start to get ahead financially until they’re at least 50 years old. This is when all the hard work over earlier years starts to pay off, and they start to receive the financial rewards of;

  • Paying off a mortgage on their own home and/or their own student loans etc, which significantly increases their regular surplus. This surplus can be dedicated elsewhere, such as other investments,
  • Promotions and pay rises as they become more skilled, experienced and valuable in the workplace,
  • Often, children leaving home which also increases their regular surplus, and
  • The effect of compound interest has begun to provide a decent result. This is because the value of any assets accumulated by this stage of life (such as people’s home and KiwiSaver) is starting to accelerate faster than in the early phases of their lives.

The bottom line

Whether or not you’ve bought into some of the myths above, the truth is that they’re still just myths. To ensure you get where you want to be financially, it’ll pay to avoid buying into these myths yourself, and most importantly of all – avoid the people who spout them!

Click here to find Milestone Direct on Eldernet.

This article has been contributed by Joseph Darby, CEO and authorised financial adviser at Milestone Direct Ltd. This article first appeared on the Milestone Direct website. The views and opinions expressed in this article are those of Joseph Darby and not necessarily those of Milestone Direct Ltd. The views and opinions expressed in this article are intended to be of a general nature and do not constitute a personalised advice for an individual client. A disclosure statement relating to Joseph Darby is available, on request and free of charge.

About Milestone Direct Ltd

Milestone Direct Ltd
Milestone Direct Ltd is a full-service financial advice firm with a focus on retirement planning, wealth management, and ensuring your funds don't run out before you do. Milestone Direct is unique, with; no product provider ownership, no quotas, and all financial advisers are paid a salary instead of commission. Milestone Direct Ltd are already trusted as the official financial advice provider to organisations such as the NZ Defence Force, so you can trust them too. Call now for a free and no obligation initial consultation, toll-free 0508 645 378 or learn more at: