5 pieces of senseless financial advice that most people believe

In our increasingly digital world, financial advice is free and abundant.

From influencers to finance graduates on Instagram, everybody is advising others on how to manage money and build wealth.

However, financial advice is not a one-size-fits-all and is not created equal. There are some myths regarding financial awareness that can lead individuals astray and thus, debunking them is necessary.

A common misconception is that buying a home or having your own house is a wise financial decision. It won’t just secure you but also your kids and one should buy a home by 28 years of age. Now, while being a homeowner is a solid investment, it’s not suitable for everyone and it’s not always the right time to buy real-estate. In certain circumstances, renting can make more sense, especially when you know that you’ll have to move frequently or when housing prices are inflated. It is wise to weigh the costs of investing in a property. You will have to pay maintenance fees, property taxes, invest in new furniture and so much more. Renting can, in these conditions, offer flexibility, allowing you to invest your money elsewhere.

Debt is often painted with a bad brush. People believe that all forms of debt are negative for their financial health and can lead to defaults in the future. Now, while excessive debt can be harmful, not all debt should be seen as the same. Student loans, for example, can be considered ‘good’ debt because they can lead to asset accumulation or increased earning potential. ‘Bad’ debt, on the other hand, typically refers to high-interest credit card debt or loans used for non-essential expenses which is usually used for leisure or unimportant tasks.

Listening to or influenced by others, some people start avoiding investing in the stock market altogether. They perceive it as inherently risky because ‘one of their relatives’ lost money in the stock market. While stocks can be volatile, it is a misconception to think that all stock investments are risky. On the contrary, if you invest in stocks after proper research and financial advice, stocks can be an essential part of your portfolio which can help you grow financially in the long run.

Many people refuse to use credit cards or even collect them because they believe that credit cards can lead to financial ruin. While it is true that irresponsible usage will lead to financial troubles and debt accumulation, avoiding them completely isn’t a very practical approach. In fact, credit cards offer convenience, rewards, discounts and can help build a positive credit score when used responsibly and paid on time.

Earning a high income does not automatically ensure financial success. In fact, this one varies from person to person. While a substantial income will certainly make it easier to achieve financial goals, it doesn’t guarantee prosperity if one doesn’t learn how to manage their finances wisely. Without sound knowledge, high earning people can fall into the trap of overspending and debt and will eventually fail to save for the future. Thus, financial success is more about how you manage and save your money than the amount you earn.