Sometimes it can be hard to sort out the right information from the wrong. Beware that every individual has their own unique relationship with money, so they have different wisdom. Below are some examples of controversial or common bad advice.
Credit Cards:
Some people, family or experts, may encourage you to avoid using credit cards since you are owing debt in a way. However, when used responsibly, credit cards can be a huge boon to your credit score. It’s an easy way to build credit, especially if your score has taken a plunge.
Credentials:
It’s always important to know where you are getting your information from by checking the source’s credibility. When listening to financial advice, like on the best stock to invest in right now, it’s important to ask one key question: Do you know who’s giving this information to you? And this advice may not even be helpful for you.
Emergency Funds:
Some believe that emergency funds are only for those who are bad at their jobs and are at risk of being fired. This bad financial advice couldn’t be further from the truth. An emergency fund serves many purposes. It can help you with costs relating to a layoff, a job loss, an unexpected expense, and more. Plus, no matter how great you are at your job or how stable you believe it is, there is always somewhat of a chance that something may happen unexpectedly.
College:
Many families assume that college is an automatic choice for high school students, pushing their children into a college or university setting. College is important, but they should also consider the financial implications of getting a degree or an alternate route like a trade school.
Don’t Waste Money on Conveniences:
Some financial experts, like Suze Orman, strongly encourage consumers to stop spending on products and services that make life easier. She says “in the long run, it’s going to make [life] harder.” There’s also been an attack on everyday conveniences, like purchasing a $5 latte on the way to work.
But, do $5 lattes or hiring someone to clean your house really affect your bottom line? What if instead of spending three hours cleaning your home, you devoted three hours to building a side business that could earn you thousands of dollars per year? Before doing someone else’s suggestions, consider the opportunity costs of how beneficial or detrimental your decision may be to your financial health and other areas of your life (like time).
Written by Anna Li