🍵 15 Worst Pieces of Financial Advice
There is a lot of bad advice. I have seen countless get-rich-quick schemes, investing scams, and of course my worst enemy - life insurance salesman stating that it is an investment. You need to guard your eyes and ears when it comes to who you listen today. Today, ya boi wants to pop off on some misconceptions I see.
1. You can’t get rich working 9 to 5. This is just plain wrong. Your 9-to-5 job can absolutely make you rich with the right money management skills. The key? Put your money to work with every paycheck. Start early and watch your financial freedom grow. Here’s how:
- Take advantage of company-sponsored retirement accounts like 401(k) and Roth IRAs.
- Ask for raises and promotions. You might not always get a “yes,” but sometimes all you need to do is ask.
- Show up every day. A strong work ethic can significantly improve your “luck.”
- Switch companies regularly. Each move can net you a 15-20% raise.
- Avoid bad debts. High-interest loans and credit card debts will kill your wealth-building efforts.
2. Follow your passion. Sounds great but often impractical. Your passion might not pay the bills, but your strengths will. Creative outlets like writing or woodworking are wonderful hobbies but might not be financially sustainable. Instead, pursue a career that aligns with your strengths and maximize your earning potential.
3. Save 10% and you’ll be set. This advice is outdated. Lifespans are lengthening, taxes are rising, and inflation is a constant. A 10% savings rate often isn’t enough for a traditional retirement. Aim to save and invest at least 20% of your paycheck. Fund your 401(k) and Roth IRA and build an emergency fund. Your future self will thank you.
4. College is useless. College graduates generally earn more than non-grads. Exceptions exist, but don’t count on being one. To manage costs:
- Start at a community college, then transfer to a 4-year school.
- Attend an in-state school to save on tuition.
- Choose a marketable degree that offers good job prospects and salaries.
5. You only live once. This often translates to “spend your money on temporary pleasures.” Instead, achieve financial independence and then do whatever you want for the rest of your life. That’s true freedom.
6. Never use a credit card. Using credit cards responsibly can maximize your dollar. Benefits include points, building credit, fraud protection, airline miles, and purchase warranties. Yes, credit cards need to be used with caution, but they offer significant advantages when managed well.
7. Renting is throwing your money away. Homeownership is often more expensive than people realize, with taxes, interest, maintenance, and repairs. Renting can be the right financial move for many, providing flexibility and fewer responsibilities.
8. You gotta hustle 24/7. This leads to burnout. Rest and relaxation are crucial for productivity. Balance is key to a sustainable and healthy hustle.
9. There is no such thing as good debt. Not true. Smart debts can pay off, such as student loans, business loans, home equity loans, and sometimes mortgages. The blanket statement “all debt is bad” is overly simplistic and false.
10. Crypto is the future. Nobody knows this for sure. Never take advice from people who claim to predict the future. Be cautious with speculative investments.
11. Watching Netflix will make you poor. The issue isn’t Netflix; it’s a lack of motivation. Unmotivated people will find distractions elsewhere. Watch Netflix in moderation and stay focused on your goals.
12. Read 5,000 books a year. Reading is good, but doing is better. The marketplace values experience and action over the number of books you’ve read. Balance knowledge with practical experience.
13. Your credit score doesn’t matter. It does. A good credit score makes things cheaper, like car loans, mortgages, business loans, insurance rates, and security deposits. Employers and landlords might also check your credit.
14. Don’t worry about saving, just earn more. Earning more is great, but without good saving habits, you’ll just spend more. You can’t out-earn bad spending habits. Control your spending to truly benefit from higher earnings.
15. Investing is gambling. Unlike gambling, investing has a history of making many people wealthy. It’s not your salary, savings, or upbringing that will make you rich; it’s your investments. Be smart about where you put your money.
What would you add to this list?
