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After discovering the path of financial independence (FI) in 2017 I quickly became exposed to so many different viewpoints and opinions about money. Some good, some bad and some just flat out ridiculous. So many people with their own opinion on how you should handle your money. This is especially evident with social media and television that it’s hard to separate the money truths from the money myths.

This is where Habesha Finance comes in. As someone who’s broken through the walls of debt, gained control of our finances and steadily on track to financial independence I want to provide 17 money myths that you need to be aware of. This way you’re not trekking on the path to FI blind and fall prey to any financial traps out there.

1. Money makes you happy. Obviously, this is just plain untrue. Sure, the more money you have the easier it will be to afford things and make life easier. However, without discipline and control more money will make you less happy.
2. You need a credit card. “A credit card is the cigarette of the financial world,” said Dave Ramsey. This metaphor may be a bit extreme, but I get it. There actually is no need to have a credit card, ever. You can do more harm than good with credit cards and I haven’t owned one in about two years. When I did have one to “build credit” I barely used it, since I’ve grown to become debt adverse.
3. Financing is the only way to get a car. Far from the truth. Not to mention financing is a way of overpaying for something that literally loses value instantly you make the purchase. Get a used car and pay cash for all of it. This goes for leasing a car too. Just don’t do it, plain and simple.
4. You have your whole life to save for retirement. Saving for retirement is not something you wait to do after the age of 30 or 40. Start as early as you can and let compound interest do its magic.
5. A traditional brick and mortar bank is the only place to have a savings account. I used to keep an emergency fund in a savings account with my local bank. This all changed once online savings accounts became a reality and started offering very competitive interest rates. I wasn’t even getting half a percent on my savings account at my traditional bank. Since we moved to an American Express high yield savings account in April we’re gaining 1.55% on our emergency fund. Online savings account can be better and more profitable options for storing money. Plus, they are FDIC insured just like your big name banks.
6. Your family gets your assets automatically after you pass. One of the most common misunderstandings when it comes to personal finance. You need a will and a plan for your estate. This is something you need to handle ASAP!
7. 401(k) and 403(b) money can be taken out anytime. While I love these kinds of retirement accounts, there are rules you have to abide by. Typically you’re withdrawing from these accounts after the age of 59-1/2. Make sure you maintain a taxable savings account too and keep low-cost index funds in that.
8. You don’t have to pay taxes with cryptocurrency gains. There’s been so much craze over cryptocurrency like Bitcoin and Ethereum and with the craze comes misinformation. For the record, any gains or “money” you make by selling cryptocurrency will have tax consequences. So stop thinking you can avoid taxes with cryptocurrency.
9. Renting is a waste of money. Not everyone needs to buy a house, townhouse or condo. Better yet, not everyone should buy a house, townhouse or a condo. Renting is a great way to stay away from home insurance and maintenance costs that you would have to pay out of pocket. Personally I enjoy renting, but with a growing family I can definitely see the benefits of home ownership and a house is in our future plan. Right now, renting is a great way for us to knock down debt and save a lot of money for the future.
10. Life insurance is for everyone. As much as I rave about having term life insurance there will come a point where you won’t need it. That’s why I advocate for term life insurance. It’s cheap and serves the temporary need while you save and invest as much as possible.
11. You need to build credit. See #2. You can achieve every financial goal you have without having to go into debt. Life is more simple this way. And when it comes to finances, most of the time the simpler the better.
12. Go to college and take student loans if you have to. I had about $40,000 in student loans. 8 years later I made my last payment to FedLoan Servicing. If I had to do college over again I would make sure I never borrowed money. There is no promise of employment and no guarantee of a high income paying job once you graduate. The best and most important financial decision you can make when it comes to school is to avoid student loans.
13. Retirement age is 65. Once I discovered how far along I was on the path to financial independence and early retirement I quickly realized how ridiculous retiring at 65 is. There’s absolutely nothing wrong with working at 65. Even I plan to continue to do some type of work for the rest of my days, but what that looks like is yet to be determined. More to come on this in the future.
14.  I don’t need an emergency fund. That’s what credit cards are for. This one makes me shake my head every time. Credits cards are not for emergency. You prepare ahead of time and save money for your emergencies in life. Having a fully funded emergency fund is about being at peace during times of financial chaos. Nowadays you can find high yield savings accounts that pay 1.5% to 1.65% interest which is not bad for an emergency fund account.
15. You have to be rich to invest. Absolutely far from the truth. I’ve already introduced how easy it is to invest in stocks using index funds. Simply start with the total stock market index fund and build other investments around this one fund.
16. I have to work for a company to get a retirement savings account. One of the greatest money myths out there is that you can only save for retirement if you work for a company. A taxi driver or a self-employed doctor can have a retirement savings account.
17. Enjoy life, spend money, YOLO (You Only Live Once). Yes, enjoy life. And yes, it’s ok to spend money. But NOT in the name of “YOLO.” Treating money and finances with this mindset will lead you down to living paycheck to paycheck and ultimately broke! So go back through this list 1-16 and be smart with your money starting right now.

Obviously, these aren’t the only money myths out there in the world so if you have any of your own that you’ve come up with feel free to comment and share.