Our lives are dictated largely by habit and here-say. We tend to make our decisions based either on our previous ones or based on the advice and anecdotes of others. Despite the fact that we largely ignore financial education in the US, we’ve still been subject to the odd rule of thumb when it comes to handling money or making financial decisions.

While these nuggets of conventional wisdom may have originated with well-intentioned friends or family, they turn out to not only be untrue in many cases but may also be detrimental to your specific goals. Let’s take a look at some of the more prevailing money myths you’ve probably heard once or twice.

Myth #1: A penny saved is a penny earned

There are two sides to this coin (pun intended). Technically a penny saved is better than a penny earned once you take into account taxes. Depending on your tax bracket, you could be paying 10-37 cents of every dollar to the Feds. That means for every 100 pennies you earn, you may only get to keep 63-90 of them. And that’s just Federal. Adding in state and local taxes means that “penny earned” is worth even less.

That said, while saving as much as you can will definitely get you closer to financial independence, increasing your income, even with the tax burden, will get you to FI faster (assuming you don’t increase your spending to match).

Myth #2: A home is a great investment/Renting is throwing money away

What was once seen as a foolproof “investment” became a suffocating albatross around the necks of many of us after the recent financial crisis. It’s possible you’ve found an amazing deal or plan to live out your days in your house, in which case it may be a good investment (not great unless it’s generating income). I may be a little bias because of my own experience with this one, but I’m not counting houses (outside of rentals) as an investment at all anymore.

As for throwing away money on rent, I think this just requires a perspective shift. Instead of framing it as buying vs renting, if you view housing as a consumable expense like food and gas, you can appreciate the value of renting a bit more.

While homeownership may mean your monthly payment is partially building up equity, if you factor in the interest, property taxes and upkeep, you may be “throwing away” the equivalent of rent each month anyway. On top of that, you’re saddled with a ginormous debt and severely hampered in terms of mobility.

Myth #3: Cash is king

If you can’t control your spending, then yes, this is 100% true. But if you’re responsible and disciplined, you’re missing out on a whole world of cash and travel rewards by not using credit cards. I use my Amex Blue card just for gas and groceries and still usually earn several hundred dollars in cash back each year.

Myth #4: I can’t afford to invest

You really can’t afford NOT to invest, and the earlier the better. The surest way to achieve financial independence is to have your money work for you and the easiest way to do that is to take advantage of compound interest. The US Stock Market has a historical average return of ~7% per year. Investing at an early age could make you a millionaire by the time you retire. Try the FIRE Age Calculator to play around with the numbers.

The best way to get started when you don’t have a lot to invest is to find a service that lets you buy fractional shares versus full shares. The idea is to invest a set amount of cash at regular intervals and gradually build up your portfolio. There are several robo-advisors that can help you achieve this. I personally use Betterment, but M1 Finance and Wealthfront are a couple others to check out.

Myth #5: Carry a balance to help your credit score

No. Just no. First, if you’re required to pay interest to get a better credit score, the system is broken and we should all rebel against it and switch to cash only.

Fortunately, it’s just a myth. You don’t actually have to pay for a good credit score, so don’t carry a balance if you don’t have to. Either pay in full or pay the statement balance each month. I have never paid credit card interest and have a credit score over 800 (historically I have paid off my statement balance, not the full balance).

Avoid paying interest whenever you can. Compounding works against you just as strongly as it can work for you.

Takeaway: Always Ask Why

In writing this post the takeaway for me has been to question everything. Conventional wisdom assumes we all fit into the same mold. We don’t. We’re all individuals with different needs and goals. Ask why before you make a decision. Challenge your assumptions about money and see if you don’t start making better financial decisions because of it.