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7 Money Adages That Don’t Always Ring True

They may have worked in the past, but today these financial rules can cost you. 

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You need money to make money. It’s always better to buy than rent. Red cars cost more to insure. These are just a few examples of money wisdoms we’ve learned to live by, but are they even true?

“Wives’ tales exist because sometimes we need a quick and easy way to be able to understand a big concept,” says Christopher R. Manske, a certified financial planner and president of Manske Wealth Management in Houston. “Anytime you hear the words ‘always’ or ‘never,’ that's probably an old wives' tale, because there are so few absolutes in life.”

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When it comes to affairs of the bank account, there are many money myths we encounter — including these seven:​

1. It’s always better to buy than rent

True or False: Depends 

Conventional wisdom says that purchasing your home or vehicle is better than renting. You’ll have something to show for it when the loan is paid off. For some, that’s true, but for others, it's not. “I’m a proponent that it’s better to buy than rent, but it depends on your time horizon,” says Howard Dvorkin, a CPA and chairman of “Someone who buys has obligations — not only insurance and real estate taxes but costs that renters don’t have to pay for.”​

There’s no wrong or right with car leasing either. “I buy and drive until the wheels fall off, but, frankly, it depends,” says Dvorkin “If you have a business, and you can deduct the lease payments, that probably makes a lot of financial sense. If you worry about exceeding the mileage or your job is far away, it’s not so great.”

2. You need money to make money

True or False: False 

Thanks to the rise of social media, gig economy services and consulting, you don’t need a lot of cash to make money. Just ask all the social media influencers who have made fortunes with a camera and YouTube and TikTok accounts, or the accountant who has little in the way of overhead other than her expertise. “With a full-service business, the inventory is you,” says Dvorkin. “If you have a store, you have to pay for rent; you have to pay for inventory and staff.”  

3. Pay yourself first and forget it

True or False: Depends  

Aimed at helping you save, the idea is every time you get paid, a predetermined amount is automatically routed to your savings account. Everything else goes to your bills and spending money. By making it automatic, you don’t have to give it a second thought. 

The saving part is good, but the set-it-and-forget-isn’t, says Manske. Savers run into trouble when they don’t increase their savings rate as their income rises. “Every time you get a bonus, every time someone gives a gift, that money went to checking not savings because you set it and forget it,” says Manske. 

4. Your stock allocation should be 100 minus your age

True or False: Depends 

With this rule, you take 100 minus your age to determine your stock allocation. Everything else goes to bonds. It can give you a baseline idea of how you should invest, but it’s not a hard-and-fast rule, especially the younger you are. 

Take a 50-year-old who has 15-plus years left earning income. If the person followed the 100 minus your age rule, only 50 percent would be invested in stocks, which have the potential for a better return over time. That hurts their earnings potential. “A good asset allocation is half the battle, but you need to be a little more aggressive in your youth and a little less aggressive as you close in on retirement,” says Dvorkin.  

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5. Red cars are more expensive to insure

True or False: False 

Driving a red sports car may get the attention of police officers, especially if you’re speeding, but it won’t cost you more to insure. Auto insurance premiums are based on the car make, model, body type, engine size and age of the vehicle. The sticker price, cost to repair it and your driving record are also factors, according to the Insurance Information Institute. 

6. The older you are the more you pay for auto insurance

True or False: Depends 

That’s true if you’re 75-plus, but in your 50s or 60s, you can see some of the best savings of your lifetime, according to data from Progressive. Experience counts. Older adults in many states are also eligible for driver discounts. They can enroll in and complete state-sanctioned driving courses, such as the ones offered by AARP, AAA and the National Safety Council (NSC). If they pass, it’s usually good for around 10 percent off their liability insurance. ​

7. It’s better to be in a lower tax bracket

True or False: False

Moving into a higher tax bracket should be welcome news, but many people fear they’ll end up bringing home less pay. Thankfully, that one falls in the false column. You’re only taxed at the higher rate on a portion of the new income, so your take-home pay is more. “You will pay more taxes, but it’s also true that you will have more money,” says Manske. “Our goal should be to get into the highest tax bracket.” 

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