5 Popular Pieces of Money Advice You Should Stop Believing

5 Popular Pieces of Money Advice You Should Stop Believing

Not every financial tip will grow money

A Man Showing Popular Money Advice You Should Stop Believing

Money advice is omnipresent.

It’s like air — everywhere. Financial tips come in all sizes and from various sources — Family, friends, coworkers, millionaires, books, neighbors, commuters, the internet, etc.

And like with most things in life, not all money advice is created equal.

When I was younger, I was given a lot of bad money advice by people who were supposed to be helping me. For example, one relative told me that I should never invest in the stock market — it’s too risky. So instead, I put my money into a savings account that paid very little interest.

Fortunately, over time I’ve learned which money tips to take with a grain of salt and which ones to follow religiously.

Not because that money advice is bad or anything. But because they just don’t make sense to everyone — it’s not a rule carved in stone.

And in this article, I’m going to share 5 popular pieces of money advice that you should stop believing.

1. Debt is bad

When it comes to debt, there are two schools of thought:

One says that debt is bad and you should avoid it at all costs.

The other says that debt can be a good thing as long as you’re using it to purchase assets (like an investment property) that will appreciate over time.

Which one is right?

The answer is — both of them are correct, to an extent.

Debt can be bad if you’re using it to purchase things that will lose value over time (like a new TV).

Debt can be a good thing if it’s used correctly. For example, if you have a mortgage, that debt is helping you to own a home. Student loans can help get an education, leading to a better job and more money in the future.

The key is to be smart about your debt.

Don’t go into debt just for the sake of going into debt.

And ensure that you’re only taking on debt for things that will increase in value over time.

2. Credit cards are evil

Credit cards get a bad rap for good reason. Many people use credit cards to buy things they can’t afford, and then they end up in debt. Bad debt.

But credit cards don’t have to be evil. In fact, if you use them the right way, they can be a great tool.

For example, if you use a credit card to pay for things like groceries and gas, you can actually earn rewards points that you can redeem for cashback or free travel.

Also, credit cards are a great way to build a credit score.

Just be sure to pay off your credit card balance in full each month, so you don’t get charged interest.

And never spend more money than you have in your bank account.

3. Stock market investment is risky

Investing in the stock market can be a scary proposition, especially if you don’t know what you’re doing.

But the truth is, investment isn’t nearly as risky as people make it out to be.

In fact, if you’re diversified and you invest for the long term, the chances of losing money are pretty slim.

The key is to do your research, invest in companies you believe in, and stay the course.

Don’t get scared out of the market just because you see the odd dip here and there.

4. A bank is a safe place

Banks are supposed to be safe places where you can deposit your money and know that it’s in good hands.

But the truth is, banks are businesses just like any other business. And they’re in the business of making money.

So while your money is technically safe in a bank, it’s not necessarily growing.

In fact, most banks offer interest rates that are lower than the inflation rate. This means your money is actually losing value over time.

A better place to grow your money is in an investment account like a 401k or an IRA. These accounts offer tax breaks and the potential to earn more interest.

5. Consider home equity as a piggy bank

Home equity is the difference between what your home is worth and what you still owe on your mortgage.

For example, if your home’s present worth is $250,000 and you owe $200,000, your home equity is $50,000.

Many people think that they can use their home equity like a piggy bank and withdraw money whenever they need it.

But the truth is, you can’t do that.

You can use this equity only to secure a lower-cost term loan or line of credit, which can help you fund your home renovations, your child’s education, or to fund the down payment on a second home.

So while home equity can be a great resource, it’s not something you should tap into lightly.
Final Words

So there you have it — 5 popular pieces of money advice that you should stop believing.

Just because something is popular doesn’t mean it’s right for you.

When it comes to your finances, there is no one-size-fits-all solution.

Do your own research and make decisions based on what makes sense for your situation.

CONTRIBUTED BY Darshak Rana.

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