The Worst Money Advice That Keeps Going Around
The Worst Money Advice That Keeps Going Around, According to Experts
Andrew Lisa Mon, April 24, 2023 GoBankingRates
Some of the most popular money advice is as unreliable as it is common. From social media drivel to well-intentioned counsel from industry professionals, money misinformation can come from anywhere.
Sometimes it's bad investment advice. Other times, it's misguided suggestions about saving, spending, borrowing or building credit. No matter the subject, all misleading money guidance has one thing in common -- it never helps the person on the receiving end.
GOBankingRates asked a variety of experts to share the unsound financial advice they would most like to see go away. Their answers span all topics and categories, but they come to the same conclusion -- a lot of what you've been hearing about managing your finances is wrong.
Avoid the following bad money advice at all costs.
Carry a Balance To Improve Your Credit Score
You can improve your credit score by using credit cards responsibly, and the first rule of responsible credit card use is to pay your balance in full every month to avoid compounding finance charges. Some people, however, make the mistake of believing that you have to carry a revolving balance in order to reap the benefits -- which is exactly what you don't want to do.
"My boss proudly explained to me that she carries a credit card balance and pays interest on it in order to increase her credit score," said Martin Lassen, founder and CEO of GrammarHow. "She received this recommendation from her mortgage broker. It was suggested that she keep the balance between 40% and 50% of her credit limit. It's the worst financial advice I have ever received."
You Have Plenty of Time To Worry About Retirement
Credit card debt is so troublesome because of the snowball effect of compound interest. When you're saving instead of spending, however, compounding works in your favor by converting small contributions into a big retirement nest egg -- but only if you give it time to work its magic.
"When I was young, one of my friends advised me to stop worrying about retirement," said James Crawford, co-founder of Deal Drop. "He said I would have plenty of time to think about it later."
It's hardly unusual. People often hear that they should put off retirement planning to invest in something more immediate like a business. That's bad advice that will force them to save much more as their timeline grows shorter.
"It takes a long time for your money to increase," said Crawford. "You'll need to save less money over time if you get started early."
Invest In Actively Managed Funds
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