Ignore This Bad Financial Advice That’s All Over the Internet.

Here’s my two cents: financial advice given by “experts” on TikTok or personal finance “gurus” on Instagram is always going to be a little crappy. Even if what they are telling you is not a blatant error or an attempt to deceive you, it is probably oversimplified.

Again, weighing any generalized financial advice is not easy. If you’re not getting advice and guidance from influencers, you may be stuck with the outdated lessons of your parents’ generation. Beyond hiring a professional financial advisor : who and what can you trust?

Here are some of the most common financial tips that you are better off ignoring and what you should consider instead.

“All debt is bad.”

Debt is scary, but the idea that “all debt is bad” is an oversimplification. There is such a thing as good debt – the most obvious example is your credit history.

Using a credit card is the number one way to improve your credit score, as long as you actually pay off the loan in full at the end of each month. You need to get into debt to rent an apartment, buy a car, take out a loan, or make almost any major financial move. If you have credit card anxiety due to the “all debt is bad” mentality, you can break free by using your credit card to make small, regular purchases without building up a large balance.

In addition to building up your credit score, you may need to take on debt in case of unforeseen circumstances. When this happens, a small voice in your head screams, “ All debt is bad! ” can send you into a state of panic, which is often a sure way to make rash financial decisions. Instead of avoiding debt altogether, create a plan – and if you’re already in debt, here’s our guide to getting organized and getting out of it .

“Skip your morning latte to save money.”

I’ll sing it from the rooftops with an avocado toast in my hand: Your morning coffee habit is not to blame for your debts. As we said earlier, your small daily purchases do not affect your long-term finances, as conventional wisdom often claims. On the contrary, the psychological support of these small indulgences can give you a healthier approach to money, helping you make smarter financial decisions in the long run.

Think of it this way: Even if your morning routine costs you $35 a week, it won’t make the difference between long-term financial security and chronic debt. You should budget for this $5 coffee after you have consciously decided that it is worth the comfort it brings you. It’s really about becoming a more conscientious spender .

“Buying a house is always more profitable than renting.”

It might have been true for our parents and their white pickets. These days, however, the decision to buy or continue a lease is far from universal. The New York Times has a helpful interactive calculator that takes into account all the factors that go into deciding whether you should rent or buy a home, such as the cost of rent, mortgage rates, where you live, and how long you plan to live there. If you’re considering becoming a home owner, here’s what you need to know before buying a home .

“Don’t talk about money.”

Many of us internalize a sense of shame and discomfort when it comes to “talking about money.” However, having open conversations about money allows us all to learn from each other’s mistakes and make more informed financial decisions. Starting with family and friends you trust, consider becoming more transparent about other taboo topics about money ( such as discussing how much money you make with friends and colleagues ).

“Buy this cryptocurrency!”

Okay, this is a little derisive. But it is important to understand that cryptocurrency is inherently a risky business and anyone who insists that you buy a particular cryptocurrency is probably not in your best interest.

You’re not crazy if you erred on the side of caution with a relatively new, highly speculative investment. If someone in your life insists on arguing with you about cryptocurrencies, here’s what you should say to make them back down .

Questions to ask yourself before seeking financial advice

Before you follow someone’s financial advice, ask yourself these three questions about the adviser.

• What are their powers? There are no fiduciary standards for becoming a “guru”. Check for certifications such as CPA (Chartered Public Accountant) or RIA (Registered Investment Advisor). If they were born into wealth and somehow tried to become powerful people, be skeptical of their tips and tricks.
• Is this too good to be true? As a general rule, avoid “get rich quick” investment advice. Because if it were true, why would this person share it with millions of people? If you can’t get it up and running, buy a financial advisor, at least do your own research before trusting an Instagram infographic touting an effective investment strategy.
• Is this person trying to sell you something? This is the most important thing to consider before following someone’s financial advice. Be careful when buying certain products or promotions, especially if the person recommending them is a stranger on the other end of the TikTok account. After all, no stranger will take care of your finances out of the goodness of their hearts if they can make money by selling you something.