Here are some money rules you can break!
“Rules are made to be broken” is an old saying we hear often, suggesting a rebellious streak that can sometimes lead to innovation and progress. In life, there are certainly social contracts and basic etiquette rules you should never break under any circumstances. These are the pillars of a functional, polite society. For instance, not picking up your dog’s waste in the park is a matter of public health and courtesy. Bringing uninvited guests to a wedding puts an unfair burden on the hosts who have planned and budgeted meticulously. The same goes for returning an object someone lent to you in good condition or respecting traffic signals like crossing the zebra on the green light; these actions build trust and ensure safety and order in our communities.
When it comes to personal finance, there are also widely accepted regulations and guidelines that you should generally follow to manage your money effectively so you can live a comfortable and secure life. However, unlike the hard-and-fast rules of social conduct, financial rules often need to be more flexible. They are not one-size-fits-all commandments. But like everything else in life, there are some money rules you can, and perhaps should, break, especially during a financial crisis, a major life transition, or when your personal circumstances don’t align with the conventional wisdom.
We often hear how important it is to start saving and creating a budget early, and this advice is certainly well-intentioned. The ability to handle your finances wisely is one of the most valuable and empowering skills you can have, as it’s crucial for your mental, physical, and financial well-being. Financial stress can take a heavy toll on your health and relationships. However, blindly following every piece of financial advice can sometimes be just as detrimental as ignoring it completely, creating unnecessary anxiety and a sense of failure if your life doesn’t fit the prescribed mold.
However, sometimes learning how to keep your finances on track can mean unlearning things you already know and questioning the “gospel” of personal finance. It’s about developing critical thinking around your money, not just following a checklist. It requires you to be honest about your situation, your goals, and what strategies genuinely work for you. This being said, here are some common money rules you can break without guilt!
1. Myth: Always pay yourself first
One of the most common and revered tips from money-saving experts is to pay yourself first. The principle is simple and powerful: it means you should automatically divert a portion of your income into your savings or investment accounts as soon as you receive your paycheck, before you pay any other bills. This ensures you consistently put something aside each month for your future. While this may sound great in theory, and it is a fantastic goal to aspire to, this is one of those money rules you can break without shame. In fact, according to many financial experts, in certain situations, you absolutely should break this rule to improve your financial health more quickly.
The primary issue with the dogmatic idea of paying yourself first is that it ignores the immediate and corrosive impact of high-interest debt. Many people graduate from college or enter the workforce already burdened with significant credit card debt and student loans, even before they get their first full-time job. Mathematically, it makes little sense to prioritize saving over paying down this type of debt. If your savings account is growing at a modest 1% or 2% interest, but your credit cards are charging you an astronomical 18%, 22%, or even 29% interest, you’re not just failing to get ahead; you’re actively losing a significant amount of money. Every dollar you put in savings is being negated many times over by the interest accumulating on your debt.
A much better idea, in this case, would be to temporarily pivot your focus. Channel that “pay yourself first” money toward aggressively paying off your credit card balances as quickly as you can afford to. Most financial experts suggest using either the “avalanche” method (paying off the card with the highest interest rate first, which saves the most money over time) or the “snowball” method (paying off the smallest balance first for a quick psychological win). Once your high-interest debts are back to $0, any money-saving expert will tell you to immediately reinstate the “pay yourself first” rule. At that point, you can save and invest with the confidence that your money is truly working for you, not against you, and then use the rest of your income for your needs and wants.
2. Myth: The less debt you have, the better your credit report
This seems like a perfectly logical conclusion. If someone who has a small amount of debt and manages it well is seen as responsible and has a good credit score as a result, it’s safe to say that having no debt at all is even better for your credit, right? Well, surprisingly, that’s wrong. While having no debt is fantastic for your cash flow and peace of mind, it can be problematic for your credit report and score.
According to experts, staying out of debt completely is wonderful for your immediate financial well-being but not so wonderful for your long-term credit rating. A credit score is a measure of how responsibly you handle borrowed money. If you never borrow money, credit bureaus have no data to analyze. This can result in a “thin file” or no credit score at all, making you “credit invisible.” In other words, this is one of the money rules you can break, and you definitely should in times of financial crisis or when you anticipate needing credit in the future for a major purchase like a car or home.
Basically, if you haven’t borrowed anything, you’re not giving any information for the credit bureau to score you on. Lenders see you as an unknown risk, which can be just as bad as having a poor credit history. They have no way of knowing if you’re a reliable borrower or a high-risk one. This can make it difficult or impossible to get approved for a mortgage, an auto loan, or even to rent an apartment or get a cell phone plan without a hefty deposit.
A better idea would be to strategically use a small amount of credit to build a positive history. A simple way to do this is to open a no-fee credit card and use it for a small, regular purchase you’d make anyway, like a streaming subscription or a tank of gas. Then, crucially, pay the balance in full and on time every single month. This demonstrates responsible credit use without costing you a dime in interest. Another option would be to take out a small car loan or a credit-builder loan from a local credit union and aim to stay on top of your payments consistently. This activity shows lenders that you can be trusted with credit.
3. Myth: Coupons and other grocery techniques are great money-saving tips
Next on our list of money rules you can break is the one saying that clipping coupons is the ultimate way to slash your grocery bill. For some, couponing is a rewarding hobby that yields significant savings, and there’s nothing wrong with that if you genuinely enjoy the process and have the time for it.
You’ve probably seen those people on TV, the “extreme couponers,” with their massive binders of coupons, multiple apps, price-tracking notebooks, and their garage shelves packed floor-to-ceiling with personal-care items, paper products, and canned goods. They can often get a cart full of groceries for just a few dollars, which is undeniably impressive.
This isn’t wrong, though, but personal finance experts point out that for the average person, this is one of the money rules you can break because there are other, often more efficient, ways to save cash on groceries. Moreover, they say you should consider two critical things before you dive headfirst into the world of coupon collecting, as the reality is often less glamorous and more time-consuming than it appears.
No. 1 is: How much is your time worth? Effective coupon collecting usually implies hours of work: searching for deals online and in flyers, printing, cutting, sorting, and filing coupons; meticulously planning your shopping list around sales cycles; doing price comparisons across multiple stores; and often driving to several different stores to get the best deals. You’ll have to do all of that every week, and it can easily take up several hours. If you spend four hours to save $40, you’re effectively “earning” $10 per hour. Is your free time worth more than that to you?
No. 2 is: Are these items you really want or need to buy? Coupons are a marketing tool designed to get you to buy specific products, often highly processed or name-brand items. Even with a sale and a coupon, the nationally advertised brand of cookies may still cost more than the perfectly good store brand—and chances are that they come out of the same factory. Furthermore, coupons can tempt you to buy things you don’t actually need, leading to pantry clutter and potential food waste, which negates any savings.
Similar to other money rules you can break, there are more practical alternatives you can try. For example, your favorite grocery store probably has a digital loyalty program that will offer you the best available price automatically and send you personalized digital coupons. Subscribe to it, let it track your purchases, and receive relevant coupons (by phone or mail) on the things you already buy frequently. Other effective strategies include meal planning to reduce impulse buys, using a cashback app that you can apply post-purchase, and focusing on buying whole foods that are in season, which are often cheaper and healthier than their pre-packaged counterparts.
4. Myth: All debt is bad
This is one of the most interesting and important money rules you can break. In the world of personal finance gurus, debt is often painted as the ultimate villain, a four-letter word to be avoided at all costs. But this black-and-white thinking is overly simplistic. Most people think all debt is bad, but it’s crucial to ask: What are you borrowing for? A home mortgage, credit to start a business, a student loan for a high-demand degree, or a modest loan for a reliable car to get you to your job are all forms of debt that can be considered investments in your future. They are “good debt” because they are used to purchase an asset that will likely grow in value or increase your earning potential over time.
The same logic doesn’t apply to “bad debt.” This includes the $10,000 credit card balance that accumulated one cute new outfit, one state-of-the-art mobile phone, or one fancy restaurant meal at a time. This type of debt is used for consumption or for assets that depreciate rapidly. You’re paying interest on something that provides no future financial return, which actively works against your wealth-building efforts.
This is one of those money rules you can break and actually end up benefiting immensely from your choice by leveraging debt strategically. Moreover, personal finance experts agree that education loans are often a prime example of “good debt”. The data consistently supports this. For instance, a report from 2015 showed that college graduates earned 56% more, on average, than high school graduates over their lifetimes. The debt, in this case, is the price of admission to significantly higher lifetime earnings.
So, it’s time to stop thinking that all debt is inherently bad and start seeing interest as simply the cost of using someone else’s money over time. When you frame it this way, it becomes easier to assess the merits of different kinds of borrowing on a case-by-case basis. You can ask smarter questions. Does that new outfit increase in value or improve your life in a tangible, lasting way? Is it truly something you want to be making interest payments on a year from now? Is this loan an investment in my future, or is it just for a fleeting want?
Read on to discover other money rules you can break!
5. Myth: Everybody needs a budget
Creating a detailed, line-item budget is often touted as the absolute foundation of financial health. It’s a great strategy that can work wonderfully for some people—if you’re a detail-oriented person who enjoys spreadsheets and is already skilled with this kind of tool. But for many others, strict budgets can be pretty difficult, intimidating, and ultimately unsustainable. This is especially true if you’re just getting started as a couple trying to merge finances, you’re a new graduate with an entry-level salary, or you work as a salesperson or freelancer whose income fluctuates wildly from month to month.
In other words, you should look at this idea as one of those money rules you can break. There’s no shame in admitting that traditional budgeting isn’t for you. In fact, many of us don’t like spreadsheets, meticulous tracking, and rigid spending limits. If that sounds familiar, don’t beat yourself up over it. Trying to force yourself into a system that doesn’t match your personality is a recipe for failure.
According to personal finance experts, this is a common story: people will get motivated, try to create a hyper-detailed budget, and then after a few months of feeling constrained and guilty, they lose their mind and hate it. Similar to any other overly restrictive program—like a solemn vow to hit the gym every single day or a crash weight-loss diet—if you feel constantly compelled and restricted by a budget, you’ll eventually resent it and stop doing it altogether. The worst part? You’ll also feel like a failure, which can lead to avoiding your finances entirely.
A better alternative for many would be to adopt a more flexible approach. You could track your spending using a free app (like Mint or YNAB) or a simple spreadsheet with your favorite broad categories, focusing on awareness rather than restriction. What’s great about money-management tools and apps is that they let you link your bank and credit card accounts so transactions load automatically, doing most of the heavy lifting for you. Another popular alternative is the 50/30/20 rule, where 50% of your take-home pay goes to needs, 30% to wants, and 20% to savings and debt repayment—no minute tracking required.
As long as you know what your usual spending patterns are and have a general sense of where your money goes, you can easily spot an issue or know where to adjust your spending to cover a shortfall or fund a new goal. The key is to find a system that empowers you, not one that punishes you.
6. Myth: Investing is only for the experienced and wealthy
The next entry on our list of money rules you can break is the pervasive and damaging belief that says only those with a lot of disposable income and expert-level experience can invest. The world of investing is often portrayed as an exclusive club for the rich. But this is far from true and is one of the most harmful financial myths out there, as it keeps everyday people from accessing one of the most powerful wealth-building tools available.
It’s completely understandable if the thought of Wall Street, with its complex jargon and flashing stock tickers, makes your head spin. It’s designed to seem intimidating. However, you don’t need a degree in business or a six-figure salary to make money in stocks. In fact, every personal finance expert will tell you that the single most important factor in successful investing isn’t how much money you start with, but how much time you have. Consistently investing some of your savings in the stock market is a wise and accessible way to increase your net worth over the long term, thanks to the magic of compound interest.
This being said, this isn’t just one of those money rules you can break; you also should do that as early as possible. There are two simple and effective ways to invest for regular people, neither of which requires you to be a stock-picking genius.
One approach is to simply invest for the long term and remain patient. The market will have good years and bad years. The key is to understand that, historically, even a down or volatile market will settle back into regular gains over time. So don’t freak out and sell all your holdings if Wall Street has an awful day or a terrible quarter. Time in the market is far more important than timing the market.
Another powerful and highly recommended approach for beginners would be to invest in low-cost index funds. These funds hold a wide variety of different bonds and stocks (sometimes hundreds or thousands), which automatically diffuses your risk. Instead of betting on a single company, you’re betting on the overall growth of the economy. These funds simply aim to mimic the performance of major indexes such as the Standard & Poor’s 500 (the 500 largest U.S. companies) or the Russell 2000 small-cap index.
Fortunately, similar to other money rules you can break, getting started is easier than ever. You can open an account at one of the many discount brokerages, like Ally, Charles Schwab, Fidelity, or Vanguard. These companies specialize in helping rookie investors through the process of opening accounts and picking simple investments, and their sites offer a wealth of calculators, free research, and educational tools. You can even start with a robo-advisor like Betterment or Wealthfront, which will build and manage a diversified portfolio for you for a small fee.
If you’re new to this game, this book can help you become familiar with stocks and funds and build your confidence to take the first step.
7. Myth: When you retire, consider a withdrawal of 4% of your portfolio, then make annual adjustments for inflation
The so-called 4% rule is a popular retirement planning guideline. It calls for a retired senior to withdraw 4% of their portfolio in their first year of retirement, and then adjust that dollar amount for inflation each subsequent year. The research behind it suggested this would give you a high probability that the portfolio will last for 30 years. However, as with other money rules you can break, this rule was developed in a specific economic era and comes with many assumptions, making it a potentially risky one-size-fits-all approach. There are certain conditions under which you can, and should, forget about this 4% rule.
According to experts, if your retirement plan isn’t a smooth glide path—and whose is?—you should actually break it. The rule’s biggest flaw is its rigidity. It doesn’t account for market volatility. Withdrawing a fixed, inflation-adjusted amount during a severe market downturn can do irreparable damage to your portfolio’s longevity. This is known as “sequence of returns risk.” For this reason, many retirees may prefer making larger withdrawals in good market years and significantly reducing them when things are tough, or varying distributions based on their actual investment results each year.
Adjustments should also be made according to your other sources of income and your actual spending needs, which are rarely static. For instance, experts say that some retirees may choose to withdraw more from their portfolio at first to fund an active, travel-filled early retirement and strategically delay collecting Social Security benefits. By waiting to claim Social Security, their guaranteed monthly benefit will be much higher, allowing them to withdraw less from their investments once that retirement benefit kicks in later in life.
If you liked our article on money rules you can break, you may also want to read Cut Your Credit Card Bills in Half: 4 Things I Did to Stop Myself From Overspending.
