Advisory Bored: How to spot bad money saving advice

Posted By: Matt in Saving on 09/28/2018 at 06:45:18

When it comes to money, everyone has an opinion.

Right or wrong, you'll get advice from just about everyone, muddying the waters of how to save money even more than they already are.

The issue isn't so much friends, family members or coworkers trying to be helpful as much as it is you, the one getting the advice, needing to consider the source and whether or not they have a leg to stand on and one red cent in the bank.

Spotting bad advice isn't always that easy, either.

Even if someone claims they're good with money and have a little saved, you still might not be inclined to believe them when they tell you how to save money. They may just have a different situation than you do, such as someone with a high income who spends a lot but saves only because of the income portion not because they actually practice good financial habits.

Thankfully, some bad advice is easy to spot and universally panned as being porous and downright horrendous when you hear it, and that is your cue to get up politely and walk away.

Never mind the walk; just run.

For starters, has anyone ever told you how to properly use a credit card or pay off debt·

Some self-titled "experts" will beg you to take what money you have saved and spend it all, down to $0 in your savings account, and put it all toward paying off your debt in full.

While this idea might sound like a winner, simply because debt is a bad thing, you also have to account for unforeseen circumstances that may arise. For example, if you have a leak in the roof that is going to cost a few thousand dollars, but the $7,000 savings account was cleaned out to pay off debt, you're left with no money for that leaky roof and guess what·

You'll go back into debt to take care of it by ironically borrowing money or charging it on a, you guessed it, credit card.

Here's another piece of money saving advice you go throw by the wayside: only save about five percent every month out of your pay.

While the five percent advice makes sense, you really shouldn't just use that as your goal. The real number should be about 10 percent if you can, but really the final number is as much as possible, and that starts with budgeting.

And if financial advice also includes someone telling you that you don't need a budget or that they're "overrated," you're moving farther away from the truth. Budgeting is by far a necessity and the most important part of saving money.

While the advice is appreciated, it isn't always in your best interest and navigating through the good and the bad only means you'll be more successful when it comes to saving money.


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