All of us have heard different advice about money at one point or another in our lives.

But how much of that advice is worth listening to, let alone acting on?

In this article, I'll break down some common money myths and personal finance advice you'd be better off ignoring.

Money Myth #1 - You Should Carry a Balance on Your Credit Card

I'm not sure where it originates, but I've heard the "carry a balance" money myth from several people, even some within the financial sector. 

It seems to stem from the false belief that carrying a balance will improve your credit. 

It won't.

To understand why you don't need to carry a balance and how it can actually hurt your credit, you need to know how your credit score is calculated.

There are several factors involved in your credit score, but the two most important are on-time payments and your debt-to-credit ratio.

Carrying a balance doesn't mean you don't pay your bill on time, it just means you don't pay it in its entirety.

As long as you're not delinquent in your payment, paying off your balance in full won't affect your score.

But, your debt-to-credit ratio will definitely affect your score.

Any spending on your card gets reported as debt. But the credit card companies only report your balance at the end of your billing cycle. 

Paying off your cards before the debt is reported is actually one of the best and easiest ways to raise your score.

Leaving a balance on your card will always make your debt-to-credit ratio higher than if you pay either the statement balance or in full. Not only will carrying a balance cost you money in interest, but it may also be harmful to your score.

Money Myth #2 - Renting is Throwing Away Money

This money myth may finally be losing steam after the housing bubble burst in the late 2000s.

Owning a house is a costly proposition and not the ideal scenario for many people anymore.

While real estate can be a very profitable investment, the house you live in isn't an investment. It's an expense.

Yes, you build home equity, and once you've paid off your mortgage, your home is a valuable asset. But you'll always have the cost of maintenance, repairs, and taxes as ongoing expenses.

That's not to say owning a house isn't worth it. I'm only pointing out that renting isn't really throwing your money away. You're simply choosing to pay a different bill.

To buy or rent is a very personal and individual decision.

For a young family looking to settle into a quiet neighborhood for the next 20 years, it makes sense to buy.

But if you live in a high cost-of-living area or want to enjoy the ability to relocated whenever you want, it makes more sense to rent.

When you're thinking about buying a house or renting something, the expense of either shouldn't be your primary deciding factor.

Instead, consider your needs over the next 5-7 years and determine if owning a home suits your plans.

Money Myth #3 - Everyone Needs a College Degree

Since government and businesses began championing college for everyone, there's been a massive spike in the cost of that education.

Nowadays, with a world of knowledge available at your fingertips, going to college has become less necessary.

College is still seen as a positive investment because of the cultural benefits that create more well-rounded citizens. But the expense doesn't necessarily justify it anymore.

The need for a college degree really depends on what you want to do with your life.

If your goal is just to make money, you may be better off with a trade profession. These careers allow you to start working and earning right away with little to no debt incurred to learn your craft.

Consider the path a doctor takes versus a plumber or mechanic.

Because of all the school required, doctors may not be able to start earning until their late 20s. In the meantime, they're amassing massive student loan debt along the way.

Trade professionals, however, usually start learning their skills on the job right out of high school. This allows them to begin growing their wealth at an early age.

Some jobs that used to require a college degree, like programming, are starting to break away from the college mold. You can get a quality education with online programs at a fraction of the cost of going to college.

Plus, you can often start working as soon as you become proficient in one skillset.

Many programmers start out building websites to quickly start making money as they expand their knowledge and skills.

The one caveat is that many employers still require, or at least prefer, applicants with college degrees.

While it isn't actually a valid measurement of ability, a college degree may still give you an advantage when looking for work.

It's up to you to weigh the cost of a degree against the potential advantages.

Money Myth #4 - You Should Have "x" Amount Saved by a Certain Age

This money myth is actually a pet peeve of mine.

I really hate generalities and these kinds of blanket comparisons, especially when they can do more harm than good.

Take our example of the doctor above.

Telling a 30-year old resident they should have saved $300,000 by now fails to account for their unique circumstances. It can also demotivate them and cause further delays in saving for retirement. If they don't think they'll ever catch up, why bother starting at all.

While it is a good idea to begin saving as early as you can, you shouldn't be comparing your savings rate to anyone else's.

Plus, setting an arbitrary number on savings targets may actually undermine the success of your goal. If you think you've already saved enough, you may become less deliberate and actually start spending more. 

These arbitrary savings guidelines also assume you're going to work into your 60s.

If you're 30 and managed to save double the advised amount, you may slack off on your savings, thinking you're ahead.

Instead of retiring a decade early, you buy more stuff, increase your cost of living, and extend the time until, and the amount you'll need in retirement.

Replace this financial rule of thumb with "save as much as you can as early as you can," and you'll be much better off.

Money Myth #5 - You Need a Budget

If you've been around these parts long, you'll know I'm a huge budget nerd, and I genuinely believe most people would benefit from one.

But there are some cases where I may be swayed.

If you're one of the few out there who is remarkably disciplined with their spending and aware of their goals without ever really defining them, you may be able to get by without a budget.

This person is characterized by saving for all their goals before they spend a penny. They pay themselves first, then spend what's left.

If you can live below your means without even trying, you're probably fine without a written plan.

If you've ever had credit card debt, this isn't you.

Those of us who have a tendency to buy first and figure out how we're going to pay for it later definitely need a budget.

Money Myth #6 - All Debt Is Bad

This is actually not a terrible rule of thumb to embrace if you've ever struggled with debt. But in general, there are certain times when taking on debt can be helpful.

The best example would be when you're able to leverage that debt into income.

Using debt to buy rental properties, start a business, or advance your education are all valid reasons to leverage debt.

Be careful you're not just talking yourself into debt, though.

Not all college degrees are worth the expense, and the most successful businesses are cash-flow positive.

Money Myth #7 - Cash is King

Making the switch to cash can definitely be helpful if you're struggling with your spending. But if you're disciplined enough to pay off your credit cards every month, there's no real advantage to avoiding them.

Not only do credit cards offer protections that cash can't, but most also provide some sort of incentive you can take advantage of.

Cashback and reward cards can provide sweet perks that can outweigh the benefits of cash.

One of the reasons people often prefer cash is because it's been shown that you spend less when you pay in cash. The psychological barrier to purchasing helps you save.

But depending on your rewards, that savings may be dwarfed by the benefits of credit card rewards.

For example, I switched all our monthly bills to a Southwest credit card and have already earned the equivalent of hundreds of dollars worth of travel points.

I didn't increase our spending. I just switched the method of payment from check to credit, and we've reaped the benefits.

Also, credit cards offer protection in case of loss or theft to guarantee you won't lose out. If you lose a $20 bill in the grocery store parking lot, I'm afraid it's gone forever.

Money Myth #8 - Only Wealthy People Can Afford to Invest

It used to be that you had to buy whole shares of stocks, which made it difficult for smaller investors to enter the stock market.

With the rise of Robo-investors, that's all changed.

Companies like M1 Finance and Betterment make it easy to invest by allowing you to buy fractional shares.

Instead of buying a certain number of whole shares like with traditional trading, you deposit whatever money you can. Then these companies divide a percentage of shares to you instead.

If you've always wanted to invest in Amazon, but don't have $1500 laying around to buy a single share, a Robo-investor is your answer.

Money Myth #9 - Stocks Are Too Risky

It's understandable to worry that investing is akin to gambling your money on stocks.

What if you invest today and the market tanks tomorrow, leaving your savings a shadow of what they were?

If that's your concern, take heart in the numbers.

Statistically, the market has returned averages well over 7%. Meanwhile, traditional bank accounts and savings accounts fail to keep up with inflation.

Do you ever think back to how cheap something was when you were a kid? 

That price increase is due to inflation. If you're putting all your savings into a regular savings account, your dollar won't actually be worth a dollar when you're ready to use it.

That's because inflation averages 2-3%. As prices increase in the future, your dollars won't go as far if they're not earning at least the rate of inflation.

The market can be scary, but let the numbers guide you.

I opened my first investment, a Roth IRA, just before the crash of 2008/2009. My initial investment's value was slashed in half.

But I knew it was a long-term investment, so I ignored all the doom and gloom, and now it's more than quadrupled.

The key is to make sure you're only investing money you don't need right away. The stock market is not the place to put your emergency fund.

Money Myth #10 - You Can Save Later

This money myth may be the most costly one if you believe it.

It's easy to think we have all the time in the world when we're younger. The newfound freedom, financial and otherwise, makes us feel invincible. Like we can afford anything and deserve everything.

But this is the time when it's most important to start saving.

So many of us older folks wish we'd started saving sooner.

Why?

Because now we know about the power of compound interest.

When you start saving young, compound interest will be working for you faster and sooner than those of us that started later.

The earlier you start, the more you'll make, and the less you'll have to contribute to get the same results you would if you start later in life.

Money Myth #11 - Use Your Credit Cards as an Emergency Fund

While I fully endorse using credit cards responsibly, you should never rely on them in place of proper planning.

Work to save up enough for unexpected emergencies so you can avoid putting those expenses on your credit card and going into debt.

There are always exceptions that make you turn to your cards. Maybe the emergency comes sooner than you can save or is more significant than expected.

But don't consider your card a replacement for emergency savings.

That's a sure-fire way to wind up in debt.

Final Thoughts

I'm sure, throughout all of history, people have been giving and receiving financial advice.

But as with any advice, it's a smart practice to do a little research and decide for yourself if it's worth taking.

The money myths above are a perfect example of how generalities and misunderstandings can lead to financial hardship.

Have you ever been on the receiving end of bad financial advice? Leave a comment and tell me about the worst money advice you've ever been given.