Social media platforms have brought about many influencers to teach, talk about, and even try to influence people on their money decisions. Honestly, there are a bunch of grifters out there trying to make it for themselves. Then there are those trying to help people create wealth and do well financially.
Here are 10 of the Worst Financial Pieces of Advice That is Making You Poor
1. Carry A Balance On Your Credit Card
Whoever gave this advice does not know what they are talking about. Carrying a balance on your credit card will show that you cannot pay your bill on time. The interest rate on the balance is anywhere from 15-26%, and the compounding effect on that can be so significant that you could be stuck with credit card debt for a long time.
Take this piece of advice. Pay off your bill at the end of the statement every month. No balance means no interest on your payment. If you can’t pay for it then don’t buy it.
2. Save 10%, And You’ll Be Set
Saving is significant for the budget and for getting you ahead. Breaking that paycheck-to-paycheck cycle is one of the best things, but only saving 10% is no way to be set. A 10% savings rate that is invested will allow you to stop working in 51 years. So if you start work at 22 years old, you can retire at 73.
The more you save, the less time you have to work. At 15%, you can stop working in 43 years. That is the whole eight fewer years by saving an additional 5%. So try to keep as much as you can early on.
3. YOLO (You Only Live Once)
People say life is short. That is true, but if you live to be 100 years old, spend all your money, and never save, that life will feel very long. Try to save money to have it when you need to retire. It is better to be prepared than have spent everything and need to work until you are in your 80s.
4. Never Use a Credit Card
Credit cards get a bad rap for credit card debt. Some people need to improve their finances and not overspend. That is why they must learn to control their spending with better budgeting and personal finance education.
Credit cards are not evil. They give great sign-up bonuses, some which can reach up to over $1,000. They also help you get some cash back on the items you already pay for. They give insurance and warranties and protect you from fraud. They can even help build your credit if used correctly. So they are a helpful tool.
Don’t be afraid; get educated and use credit cards to enhance your wealth.
5. Renting is Throwing Away Your Money
Owning homes is a costly undertaking. It can be expensive, from property taxes, property maintenance, homeowners insurance, interest on the loan, and so many other things.
Renting can give you options. If you need to move, you can go without putting up your house on sale, find a new place to buy, and miss opportunities.
6. Crypto is The Future
Cryptocurrency may be the future, and it may not be the future. Who knows what will happen in the future? We could be trading coffee beans as our primary currency. If some people try to influence you on cryptocurrency is the future, research and figure out what you should do. Just know that we may not know what the future holds.
7. College is Useless
A recent Forbes Study, showed that a college education gives more job opportunities and higher salaries than those without a college education. In 2021, the year after the pandemic started, 86% of college-educated people had jobs, while only 68% of those with high school diplomas were employed.
A college education opens up more doors than not having one.
8. There is No Such Thing As Good Debt
There are plenty of places where debt is good. If you can pay for something that brings value to your life, it can be good debt. Buying a house can be considered good debt. It allows you to have a place to live and create a habit of saving money as you pay your mortgage monthly. Business loans can be good debt.
9. Don’t Worry About Saving; Just Earn More
Earning more does not mean you are saving more. If you are not saving now, what makes you think you will save when earning more? The best place to look is to cut expenses that are not necessary. If you can work on trying to save 10-20% of your income, then earning more will increase that. So living on less is much better.
10. Investing is Gambling
With gambling, the odds are stacked against you. Investing is much different. There is a history of investing in the S&P 500 will make you rich. The markets go up and down, but buying a simple index fund that follows the market will do well enough to create great wealth. Many people have made their fortunes from just simply investing.
This thread inspired this post.
I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.