Top 10 Worst Personal Finance Tips

Worst Financial Tips

Whenever someone gives you personal finance advice, listen to it but do your own research before actioning. Not all financial advice was created equal. And always remember, there is good advice, and there is definitely bad advice.

In this article we will talk about the bad advice so that you can cover your ears when someone tells you this advice.

(1) Save 10% of your income and it will be enough

Saving 10% of your income might have been a good rule of thumb when you were young. But is no longer valid and is largely outdated.

For beginners, our life expectancy has increased by more years than the age at which we retire. Therefore, you will need more money to survive during your old age. But to top it off, inflation is higher than ever. An average 7% increase in the cost of products and services worldwide in just one year is a big hit to our cash savings.

(2) Credit cards are toxic

Credit cards are one of the worst debts you can have. Thanks to their very high interest rates.

But the debt didn’t get there on its own. Someone put it to more use than it could pay for. If you need help with credit card debt, learn how to stop paying high interest rate.

On the flip side, credit cards can also be one of the most valuable financial instruments. Of course, as long as you put them to good use.

Some of the benefits of credit cards are:

  • Earn reward points on your purchases that saves money
  • Protection against fraud and theft
  • Earn travel points
  • Most importantly, it helps build credit history

(3) By paying the minimum amount on credit card, you will have a good credit history

If someone recommends you to make minimum payments to build a solid credit history, run away from that person. Of course, making timely payments is very important to strengthen your credit history. However, it will always be better for your personal finances to pay your balance in full.

Making minimum payments will only cause you to spend a fortune in interest payments. Remember, paying your balance in full will have the same positive effect on your credit history as just paying the minimum. In the eyes of credit analysts, it looks much better to pay your balance in full.

(4) Renting a property is wasting money

You may have been told, “Paying rent is just giving money to the landlord. You’d better take out a mortgage and then you’ll be the owner. In the end you’ll get almost the same.”

Scratch that person. It is not so simple to become a property owner and take out a mortgage. Owning also involves a lot of expenses. You’re going to be giving away money to real estate expenses. In addition to the mortgage, you’ll have expenses like taxes, insurance, maintenance fees and unexpected renovations/repairs. Put it all together, and you’ll probably end up using more money than you would on a rental.

However, that doesn’t mean that buying a property is not a good investment. The important thing is that you have enough cash to be able to pay for an emergency or to keep you afloat during hard times. Why? Because if you have an emergency and you don’t have cash, it’s not going to be easy to sell your foreclosed home just like that.

(5) You can’t get rich with a traditional job

You may think that a traditional job will never help you get rich. But this is not true. Nor is it true that you will have to work 24/7 to become rich. It is very feasible to be able to have a lot of money with a regular 9am to 6pm job.

The secret is: Don’t spend all your salary and instead, invest it. The sooner you start investing, the sooner you can become financially independent.


Some recommendations to start getting more money are:

  • Invest in your company’s savings account. Generally, large and solid companies offer this option to their employees. Very attractive rates are commonly granted.
  • Ask for a raise and a promotion in a row. You won’t always get a yes, but at least you’ll be aware of what you’ll need to do in order to get that raise.
  • Be present and be accountable for your responsibilities. The one who is present will be the most likely to be there when better opportunities arise.
  • Change companies often in order to get a better salary. Generally you will be able to get a 15-20% raise.

(6) Don’t buy stocks

People who don’t understand the stock market are often a little afraid of it. This is understandable. It can be a very complex world. So it’s not surprising that people say that buying stocks equals losing money.

While it is true that you can lose money, it is also true that you will lose money if you keep your money in the bank or in cash thanks to inflation. At least with stocks you have the opportunity to generate it.

Investing in high quality stocks and leave that investment in your portfolio without moving it and revisit it in a few years.

(7) Your credit history doesn’t matter

A good credit score equals loans with better rates. A better rate equals paying less interest. Paying less interest means you will have more money available to invest. A good credit score means things will be cheaper.

What can be cheaper? Auto loans, mortgages, business loans, and even better credit cards.

(8) If you earn more, you won’t need to save

Did you get this advice when you told your friends that you always run out of money? But this advice is a big fallacy. If they already have broken spending habits, believe me they are not going to get better when they earn more money.

Remember: More money is not going to cure your self-destructive saving habits.

(9) Investing is a game of chance

The difference between investing and gambling is that in gambling, the odds of winning are against you. Investments, on the other hand, have proven to be a way to become very, very rich.

(10) Take out a microloan

Nowadays, more than ever, it is very easy to find microloans online. It’s so easy that you might even be tempted to get one to help you out with short-term expenses. Money in your account in 24 hours? Sure!

Amazing, Right? But at what cost?

A very high one. Just look at the annual interest rates they charge. This means that not paying your microloan on time can mean a very, very high expense. These institutions could be charging you interest directly from your account and your money is wiped to $0.


Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business.

I can be reached at [email protected]. You may also visit my LinkedIn profile.

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