Debunking Popular Money Tips
Thanks to the internet, anyone and everyone can give out financial advice these days, regardless of whether or not they are qualified to do so. This, unfortunately, can lead to some advice floating around the internet that isn't great for your finances. Let’s look at three common money tips that aren’t as great as they claim.
1: The treat factor
The claim: Cutting out your daily treat - a soda, coffee, or other small indulgence - will solve all your money problems.
The truth: While spending a few dollars on a Diet Coke every day isn't insignificant, it likely won’t make a huge dent in your budget. Say you purchase a $4 drink all 365 days of the year - you'll have spent a total of $1460, which is nowhere near the cost of a down payment on a house. If it makes your daily grind more bearable, it's probably worth it to keep buying your daily treat for your quality of life.
The fix: If you need the relief of cutting a couple of dollars from your budget daily, consider purchasing it less often. And, if you do, be sure to set aside the money you don’t spend on that soda so it doesn’t disappear. If you’re looking for a way to make significant changes to your financial situation, consider cutting back on bigger expenses.
2: Cut up your credit cards
The claim: Get out of debt by using scissors on your credit cards.
The truth: You can still accumulate debt with your cards in pieces. Destroying your cards won’t help you kick a tendency to overspend. It’s also important for your financial health to have some open lines of credit - and it can damage your credit score to close or have an inactive credit card.
The fix: If your credit card debt is out of control, rein it in. Try creating a detailed monthly budget that clearly outlines your expenses, how much they cost, and how much you spend on nonessential expenses. Then, make a plan for paying down your outstanding debt. Wherever you have even a little wiggle room, you can put that money towards paying down debt. You can find ways to trim expenses or boost your income to get out of debt sooner.
It's also good to consider consolidating any high-interest debt. If this sounds like a situation you might be in, call us! Our loans are great for debt consolidation and often provide much lower interest rates than credit cards.
3: Follow your passions
The claim: Do something you love, and you’ll never work a day.
The truth: Passions don’t always pay the bills. Choosing a career based on passion alone can mean a lifetime of financial struggle. Not to mention, if you're struggling financially, there's a good chance you will grow to resent the passion you once enjoyed partaking in.
The fix: It’s best to work at a job you enjoy that pays the bills. When choosing a career path, look for occupations related or similar to your passions while also considering the average salary for each and how much income you’ll need to cover your expenses. You can always pursue your passions outside work, as a hobby, or as a side hustle.
Consider a job that plays to your skills, if not your passions. This way, you’re more likely to succeed in your career and find it fulfilling.
In summary, there are many helpful money tips on the internet, but not all advice is equal. Be mindful of what financial advice you follow, and you'll have better chances of financial success.