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31 Common Myths About Economy And Finance Get Debunked By Netizens In This Viral Thread
Every era has its myths. In the myths of ancient people, heroes split the sky with stone axes in anger and sank to the bottom of the sea for hidden treasures. In the myths of the 19th century, people believed that progress was inexhaustible and that each discovery brought only good to humanity. In both cases, people were damn mistaken...
Today, we also have many myths that people continue to fervently believe in - even though this belief actually only harms them. For example, regarding the financial sphere of our lives. And this viral online thread, from which we've chosen a selection of the most interesting opinions to present to you today, debunks exactly such financial myths.
More info: Reddit
This post may include affiliate links.
#1
That tax breaks for the wealthy will allow some of their wealth to "trickle down" to us poors.
Something is trickling down on us, but it's not money.
David 1 month ago
FYI, Trickle Down is what Keynes called his theory of govt spending that if the govt spent enough money, some would trickle down. It was a journalist in the 1950s who misunderstood and used the term for free market economics. However no reputable econ journal, nor any Freemarket economist has ever used that term for freemarket economics. Tax Breaks is called "Downstream Investments" which means if you give them more money to invest, they will invest in the economy which will create more jobs. Like a river downstream.
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#2
Turning down raises because "it means a giant jump in my taxes".
Sam Lombardo 1 month ago (edited)
People who believe that do not understand a progressional tax system
#3
Don't donate to charities at and big stores that ask for you to round up. They take your money, donate it and then THEY deduct it from their taxes.
Skip the middle man and donate directly.
Scott Rackley 1 month ago
I donate to St. Jude's Hospital and Shriner's yearly. I get to take it off my taxes.
About a week ago, a thread appeared in the AskReddit community, the author of which asked people the question: "What’s the biggest financial myth people still believe that’s actually hurting them in today’s economy?"
As of today, the thread has already collected more than 2.6K upvotes and nearly 1.4K various comments describing all sorts of "money misconceptions" common to people. The misconceptions range from strange to funny, from relatively harmless to very serious.
#4
That your employer will be there for you when times are bad. Build a savings. Keep a savings. You are a liability to them, not an asset, and will ditch you the moment they can profit from it.
#5
That you have even the smallest chance of becoming a billionaire. People don't understand the orders of magnitude difference between even a low level multi-millionaire and a billionaire. At 100 million dollars, you're still 10 times closer to homelessness than you are to becoming a billionaire. Stop trying to get there. Stop voting for people and policy that promise you that opportunity. The only way these people achieve that wealth is through siphoning it away from everyone else.
#6
Dollar stores are generally a worse food value based on size/quantity. Sure it's $1, but the $2.25 box at the grocery store has 500% more food by weight, therefore is a much better value.
You're paying a little less to get a lot less.
Many of the "financial myths" presented in this collection are related to outdated ideas about money and economics, and some are simply based on the fact that the economy is a very complex system, and even industry experts sometimes find it really difficult to understand all the intricacies of its work. As a result of a simplified understanding of the economy, erroneous judgments are inevitable.
#7
That immigrants are taking our jerbs!
Like seriously. If every immigrant, legal or otherwise disappeared tomorrow, it wouldn't do a single positive thing for me personally, much less the wider economy.
#8
That CEO’s and Owners should get X amount higher salary because they assume all of the risk.
No they don’t. If the company folds they claim bankruptcy (difficult, expensive, long process for normal people, easy for the wealthy who have lawyers on retainer who specialize in it) and go try again. They really don’t have any risk once they hit a certain level.
Kelly Scott 1 month ago (edited)
The CEOs also don't work harder nor do they "know more" than the average worker, nor do they make better decisions than the average person. They were either rich to begin with, in the right place at the right time or just lucky to have their position. This is why so many companies fold or go bankrupt. Their leadership is abysmal.
#9
Credit cards are bad. If you use them right, you can actually come out ahead.
Get a card with good cash back rewards and use it for everything. I mean everything. If you can pay your rent, bills and insurance with it do it. If you can use it for work and they reimburse you, do it.
Pay the balance off at the end of every month and make sure you keep track of your ins and outs. It requires you to be responsible but in the end its worth it.
I get at least a few thousand dollars a year worth of cash back to do with as I please. Trips, PS5, etc.
Sometimes I use the rewards to pay my balance, and take the funds I had allocated to pay off the balance and put them in my RRSP and take the tax advantage.
"Economics has evolved a lot in recent decades, and the concept of money has evolved too," says Olga Kopylova, Ph.D., an associate professor of economics at Odessa National Maritime University, whom Bored Panda asked for a comment.
"For example, various 'financial advice' from the middle of the last century was based on gold-backed money - and modern money is almost contraindicated to be withdrawn from circulation."
"Therefore, the 'financial wisdom' of our parents or grandparents - depending on our age - was completely reasonable decades ago, and vice versa, literally following it will only lead to financial losses today. At the same time, the force of inertia of human thinking is still very strong, and we think - if it worked before, why shouldn't it work today?"
#10
The American dream of social mobility/meritocracy prevents voters from addressing extreme inequality. Many think riches await them too or that if you are poor you must be lazy or a a****t etc. and are undeserving of help.
#12
They think that pure talents (including being smart) is the biggest factor to get money flowing in like a river. It is not.
"But the economy is a very volatile system, and a lack of understanding of its basic concepts, the laws of economic development, also leads people to a bad financial result. The problem is also that economic laws cannot always be reduced to simple rules accessible to all people without exception - and this also contributes to the emergence of such 'financial myths,'" Olga sums up.
The modern world is really so fast in its development that certain laws and principles sometimes manage to become totally outdated in just a few years. Which once again emphasizes - for each of us, for each individual situation, there is a winning strategy. But it is not a fact that blind and thoughtless copying of it will also lead anyone to success.
#13
"Just save money"
No. You need to do more. Most savings are not beating inflation. As a result your money is shrinking by doing that. One of the most insidious ways our money is effectively being stolen is just by having inflation make it worthless by the time you'll go to use it.
The easiest thing I am aware of is to put it in an index fund that automatically reinvests. These are automatic funds that follow a set algorithm of stocks (an index) and do not have a human element in the decision making. They regularly outperform professionals. They typically do very well compared to inflation, and require zero maintenance.
Check if your work has a retirement matching program and use that. It's literally free money and it adds up faster than you think.
There is no such thing as "too soon to start thinking about your retirement".
Green Tree 1 month ago (edited)
Index Funds are still dependant on the market. I remember well the 2008 crash when people lost 30% or more of their investement values. Of course it comes back over time but that doesn't matter if your timeframe for needing the money can't wait it out. It is certainly feeling like we are the cusp of going through that again. Building and keeping a robust cash account in a high yeild account is good common sense
#14
Keeping a balance on your credit card DOES NOT improve your credit score. What it does do, is get you comfortable having a balance on your credit card, which, when it likely gets out of control, is like napalm pouring down on your future financial hopes and dreams.
#15
That you deserve something you can’t afford because you work hard.
Deserves has nothing to do with it.
That is why, for example, it makes sense to read biographies of great business people and investors - to be inspired by their energy, their irrepressible desire to go further, and their pushing the boundaries of the possible.
But at the same time, you should always remember that you can't copy someone else's success, but it's very easy to copy someone else's mistakes. So now please feel free to read these stories and opinions - and perhaps add your own thoughts in the comments below this list as well.
#17
That renting is cheaper than owning because property taxes and insurance
It’s your equity that matters.
#18
People not realizing that a tax return is their money to begin with and they should have their deductions set up to break even or owe a little. A lot of people still think it's some kind of stimulus.
#19
Not investing back into yourself.
Investing doesn't always have to be some major cash return. It could be education, making your life easier so you have more time and energy, or simply relaxing. I know a lot of people that played the frugal game and just now getting out in their 70s.
#20
That only rich people invest.
I hear it over and over again. It's just not true at all. Someone can spend like an hour of their time and watch a couple fo Youtube finance videos and understand the basics.
They can open a brokerage with very little money (Like $100), They can then set up automatic deposits that follow them for their entire career, investing in their own financial security.
Kelly Scott 1 month ago (edited)
Dude, $100 increments are like cookies. Taxes eat four of them, electric bills eat one a month, water bill eats six a year, gas for the car eats half a cookie per month, groceries eat two a month (or more), my surgery bill would be 40+ cookies if I went through with it. There are only so many cookies you're given. Right now, every one is spoken for. And I don't see our electric company wanting to share...
#21
Buying a house is ALWAYS the right move.
Ripley 1 month ago
This one would be largely dependent on the country you are in and the tax and insurance implications. In Australia, we pay a stamp duty at the purchase of a property (a % of the paid value) and then that's it for taxes. Land tax is only applicable to properties that are not your primary place of residence. There's a lot of mixed feelings about this, but it does mean that once your mortgage is paid you are not stuck with continuous property taxes.
#22
Prices never go down it doesn't matter if the entire price structure gets resolved downstream to lower a lot they don't have to lower the price because they think no one else does so the price will never go down ever.
Toothless Feline 1 month ago
Prices on particular products do actually go down sometimes. A good recent example is gas prices during COVID lockdowns. Demand for gasoline dropped precipitously because people weren’t going anywhere, which prompted significant reductions in the price at the pump. What never happens is across-the-board reductions, which is described as deflation and is generally viewed as a sign of a failing economy. I’m not convinced that deflation is the universal negative that most economists claim it is; there are too few historical examples to extrapolate a universal principle from.
#23
Maybe not a myth, but a perception that you *must* have 20% down for a house.
You obviously need to calculate what you can realistically afford month to month, but most mortgages accept *way* less down. You will pay some PMI but again, don’t let the 20% perception stop you before you even look.
#24
I know people who refuse to invest in stocks because they are "too risky". In the short-term this is true (e.g. less than about 5 years), but not putting retirement or other long-term savings in stocks severely limits your ability to get returns on your savings.
Over a 30 year period the lowest annual return for the S&P 500 since 1926 was 7.8%, which is much more than you could expect from "safe" investments like treasuries.
One important caveat is that this refers to the total stock market (e.g. using an index fund, ETF, or total market mutual fund). Picking individual stocks is generally a bad idea for long-term savings.
Foxglove🇮🇪 1 month ago (edited)
My husband has lost 2 pensions because the administrators went bust, playing the market wrong. Customers in the home country were compensated, the rest of us just had to suck it up.
#25
“The stock market is just like gambling”
You are never going to accumulate enough money to retire without using the stock market. The market has always gone up in the long term. If it stops going up in the long term, society would be in pretty bad shape and your money probably wouldn’t be worth anything anyway.
#26
That hard work will lead to wealth.
This simply is not correct for the vast, vast majority of workers (read: anyone not C-level).
The truth is that the US is a shareholder economy, not a labor economy. Meaning that even if someone is getting regular raises, they're likely barely keeping ahead of inflation. If someone isn't investing in the market right now, then they aren't actually seeing their cut of the economy's increases in employee productivity. If they aren't investing in the market, then they're probably going to end up working paycheck to paycheck until they die, assuming Social Security doesn't provide them enough to live off of or stops existing sometime between now and when they retire.
#27
Money is not a long term store of value. It is a medium of exchange. Don't keep "money", spend it on appreciating assets and keep those instead.
#28
Car stuff:
You need a new car when your current car gets to 100,000 miles.
You need to fix everything that breaks on your car.
Buying used cars is bad because all your doing is buying someone else's problems.
Foreign cars are inferior to domestic cars.
Xenia Harley 1 month ago
I will never buy a brand new car, and haven't for years. New cars depreciate so much as soon as you drive them off the lot! There is even insurance to cover that fall in value if you smash it up right away.
#30
The expectation of living on your own so most of their money goes to rent or mortgage instead of investing.
#31
Paying interest will help increase your credit score.
John Boy 1 month ago
Your credit score is largely based on the amount of available credit, your "on-time" payments, and length of credit. NOT "how much you owe". Pay off your debt every month, and your score will skyrocket. I have a score of over 830, but am considered a "Deadbeat" by the card companies because I charge EVERYTHING, but pay off the balance every month. That means I'm using THIER money for free!
Poll Question
Which economic myth surprised you the most from the thread?
The idea that printing money causes inflation
The belief that all debt is bad
The misconception that taxes always slow down the economy
The myth that GDP growth means prosperity for all
What do you think ?
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