What is the worst financial advice you have ever heard? The fact that so many people out here are spouting financial advice means not all of it is good. Unfortunately, such unsound advice on personal finance can lead to financial mistakes and decisions. Below are examples.
Spend Money to Make Money
This phrase is commonly used but doesn’t fit all groups of individuals. Spending money doesn’t necessarily mean you will be successful in making more money. Before you spend that money, it is essential to ask yourself how the decision will impact your finances. Nonetheless, there are other vital factors to keep in mind. For instance, do you have the right skill and talent to make the extra money? What is the clarity of your vision? Will you persevere till you make the money?
Invest All Your Savings in a Single Stock
This is a wrong approach when you want to invest in the stock market. Instead, you should have a diverse portfolio. When you invest all your savings in a single stock and have less money, you are subjecting yourself to more risk. This is because a single company will influence your savings. For example, poor performance by the company you have invested in a single stock means you will lose money.
Don’t Worry About The Budget, Focus on Earning More
This is another financial advice you should avoid. Some mistake budgeting with spending less money, hence the advice on focusing on earning more money. However, the truth is you need a budget regardless of how much you earn. It helps you keep track of your earnings and spending and manage your expenses without going into debt. Therefore, knowing where your money goes through a budget is important and can give you control over your finances. If this is what you want to achieve, then you should focus on your earnings and keep track of where they are going.
Ignore Your Credit score, It Doesn’t Matter
This is another lousy piece of advice about personal finance. The truth is, a good credit score really matters. It comes with added benefits. For example, you can only get the best deals when you apply for a loan or credit if you have a perfect credit score. Nonetheless, building that good credit score takes time. Also, you may be well-established in life but cannot predict when the credit score will come in handy. This, therefore, means that your credit score should worry you. Never ignore it.
Buy Now, Pay Later
You may have received this advice when you wanted to make a purchase. It involves making a purchase and paying overtime. However, it can be disadvantageous. For instance, you may incur extra fees, making your purchase more expensive. Therefore, don’t follow this advice unless you have an exact plan for making the installment payments.
Today, there are many sources of financial advice. However, not all of them are good. The above list contains examples to beware of. Thus, always ensure you get advice about your personal finance from an expert, not just any person.