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It’s not that people are intentionally dishing out bad advice. No, the bigger problem is people just regurgitate what they read online as if it were fact without realizing it’s bad.
I achieved financial independence several years ago, and I’ve been knee-deep in personal finance for the past several years.
I’ve seen my fair share of bad advice.
And guess what? I have given out some bad advice in the past too. But I’ve learned from those mistakes and built a solid foundation based on successful experience.
Today, I’m going to share with you the 15 worst pieces of financial advice I’ve ever heard over the years. Chances are you’ve heard some of these, too.
Don’t follow them.
1: Carry a balance on your credit cards to improve your credit score
I never carry a balance. And I maintain a credit score around 830. This advice is downright criminal.
2: Your 9 to 5 won’t make you rich
With proper money management skills, your 9-to-5 CAN MAKE YOU RICH. It happens all the time. The keys to making 9 to 5’s work?
Switch jobs often to increase salary, Invest in your 401(k), Invest in your HSA if you have one, spend less than you make, Work your butt off, daily
3: Follow your passion
That’s terrible advice. Your passion won’t pay your bills, but your strengths will. Pursue a career that aligns with your strengths. Save the passions for your hobbies that you do outside of work. Maximize your earning potential. I’m a clear exmaple of this – I’m passionate about flying, but my strengths are in technical and business areas. I’ve made a career out of Tech instead of being a pilot while I fly planes for fun as a hobby.
4: Save 10%, and you’ll be set
On so many levels, this is nonsensical.
Life spans are expanding
Taxation on the rise
Jobs are changing
Inflation
10% won’t cut it. Fully fund your 401(k) and Roth IRA. Build an emergency fund. Your future will thank you.
5: The mortgage you’re approved for is what you can afford
2009 is proof that’s a lie. Your approved mortgage is the risk the lender will take on YOU. Nothing more. Don’t let the lender make you house-poor.
6: Watching Netflix will make you poor
Watching Netflix isn’t the issue. It’s a lack of motivation. An unmotivated person who cancels Netflix will replace it with another distraction. You aren’t a lazy if you watch Netflix. Just keep it in moderation.
7: You only live once
In other words, “Spend your cash on temporary happiness crap.”
How about this: You only live once. Achieve Financial Independence and do whatever the heck you want. That sounds much better to me.
8: Never use a credit card
Using a credit card responsibly is one of the best ways to maximize your dollar. Why?
Points
Build credit
Fraud protection
Acquire airline miles
Warranties on purchase
Let credit work for you.
Just be sure to pay your credit card off every month.
9: You gotta hustle 24/7
This awful advice traps people into a life of burnout.
Your rest and relaxation time is required to hustle. It’s healthy. Without rest, there’s no hustle. Give yourself enough rest to wake up every morning ready to go. If you wake up tired, you’re burning yourself out.
10: There is no such thing as good debt
Untrue. Smart debts pay off.
Student loans (In a worthwhile field)
Business loans
Home equity loans
Mortgages (sometimes)
“All debts are bad” is elementary school thinking.
11: Crypto is the future
Nobody knows that. Not you. Not me. Never take advice from people who believe they can predict the future. Ever.
12: College is useless
College graduates earn more than non-grads. Them’s the facts.
Exceptions apply but never count on being an exception.
Don’t allow people to talk you out of a smart career foundation. This might be college. It might be a trade school. It might be a series of certifications.
Now, it’s true that college is expensive, but here are ways to make college cheaper.
13: Your credit score doesn’t matter
This is something people with low credit scores say. A good credit score means things are cheaper. What types of things?
Car loans
Mortgages
Business loans
Insurance rates
Security deposits
And, don’t forget: Employers/landlords now check your credit.
14: Don’t worry about saving, just earn more.
This is a fallacy. The more you earn, the worse your spending problem gets. You will NEVER be able to out-earn destructive spending habits. Ever.
15: Investing is gambling.
With gambling, your odds are not good. Investments, however, have a clear and direct history of making a LOT of people filthy rich.
Not your salary
Not your savings
Not your upbringing
Your investments.
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