7 Money Adages That Don’t Always Ring True

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 Debt.com. “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.