Lisa Rowan* says that although there are plenty of people willing to offer advice on what to do with your money, not all of it is worth listening to.
Photo: Toms93
Even though many of us were taught as kids that it’s not polite to talk about money, the world is overflowing with people who want to tell you exactly what you should do with yours.
From the gurus who seem to think coffee is the root of all money problems to your neighbour who just loves to hand out pearls of “wisdom”, we’re bombarded with advice.
Some of that advice is terrible.
If anyone offers you the following financial advice, you have our permission to ignore it completely.
As for whether to argue with the advice-giver’s flawed logic … well, we’ll leave that decision up to you.
‘If you’d stop buying expensive coffee, you wouldn’t be so broke.’
People who don’t like to have fun love to remind you that this small purchase you make regularly is ruining your financial future.
Sure, $5 here and there can drain your bank account quicker than you might realise.
But your regular trips to the coffee shop probably don’t add up to “peeing one million dollars down the drain”, as US finance celebrity Suze Orman would like to scare you into thinking.
If you took the $5 a day you spend on coffee and invested it for 30 years, you wouldn’t have anywhere near a million dollars.
You’d have about $200,000, which may be enough motivation to cut back on extra purchases a bit.
But cutting out coffee, or soft drinks, or takeout lunches, or happy hour completely won’t suddenly transform your finances overnight.
Go ahead, make your next cup a grandé if you don’t feel like making coffee at home.
‘Just go to university; you might need a higher degree.’
Remember when we were just starting to crawl our way out of the Great Recession, and there were no jobs, and a bunch of us said, “Let’s just go back to school. This will all be solved by the time we graduate.”
That was a great idea, except most of those people still have a bunch of HECS debt.
And salaries for people with graduate degrees don’t always match the level you might expect an advanced degree to offer.
If you begin your higher education knowing that you may need a higher degree to succeed in your career (say, to be a doctor, attorney, or actual rocket scientist), then the value of investing in a graduate degree is clear.
If you can’t clearly lay out how a degree will accelerate your career growth (with numbers, please), it’s time to rethink the whole idea.
‘Owning a home is the only way you’ll ever build wealth. Renting is a waste.’
Home prices are going up way quicker than wages are increasing, so don’t feel bad if you’re spending so much of your income on a rental that you don’t think you’ll ever be able to save enough for a home of your own.
Putting your cash in investments counts as “adulting” just as much as taking out a mortgage does.
And for many, homeownership just doesn’t make sense.
Before you end up feeling backed into the homeownership-or-bust corner, remember that your individual circumstances along with those of the region where you live can add up to more tally marks in the “pros” column for renting.
‘Just make the minimum student debt payment.’
If you have a HECS or HELP debt and no other outstanding loans, there are some actions you can take to shorten the amount of time it takes to pay off gobs of money for your degree.
While it probably won’t shave years off your schedule, it may give you peace of mind to know that even if your debt is large, you can start chipping away at a bigger portion of it a little faster.
* Lisa Rowan writes for @TwoCentsLH. She tweets at @Lisatella. Her website is lisarowan.com.
This article first appeared at www.lifehacker.com.au/.
