Ignore This Bad Financial Advice That’s Everywhere Online

Here’s my two cents: The financial advice doled out by “experts” on TikTok or personal finance “gurus” on Instagram is always going to be a little shitty. Even if what they are telling you isn’t egregiously wrong or an attempt at scamming you, it’s probably oversimplified.

Then again, weighing any kind of generalized financial advice is tricky. If you’re not getting tips and tricks from influencers, you might be stuck following outdated lessons from your parents’ generation. Outside of hiring a professional financial advisor: Who and what can you trust?

Here’s some of the most pervasive financial advice that you’re 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 being your credit history.

Using a credit card is the number one way to build your credit score, assuming you actually pay it off in full at the end of each month. You need to dabble in debt in order to rent an apartment, buy a car, take out a loan, or make pretty much any major financial move. If you have credit card anxiety as a result of the “all debt is bad” mentality, you can break free by using a credit card to make small, regular purchases without racking up a high balance.

Outside of building your credit score, you may need to take on debt for unforeseen circumstances. When this happens, the little voice in your head screaming “all debt is bad!” can send you into panic-mode, which is often a surefire way to make ill-advised financial decisions. Instead of avoiding debt altogether, go in with a plan.

“Skip your morning latte to save money.”

I will sing this from the rooftops, avocado toast in hand: Your morning coffee habit is not to blame for your debt. As we’ve previously covered, your small, daily purchases don’t affect long-term finances the way conventional wisdom often insists they do. On the contrary, the psychological boost of these small indulgences can give you a healthier approach to money, helping you make more sound financial decisions in the long run.

Think about it like this: Even if your morning routine costs you $35 a week, it’s not going to make the difference between long-term financial security and a life of chronic debt. It’s up to you to budget that $5 coffee after consciously deciding that it’s worth the comfort it brings you. It’s really about becoming a more conscientious spender.

“Buying a home is always better than renting.”

This may have been true for our parents and their white picket fences. These days, however, the decision to buy versus continuing to rent is far from one-size-fits all. The New York Times has a useful interactive calculator that considers all of the factors that go into whether your should rent or buy, like rental costs, mortgage rates, where you live, and how long you plan on living there.

“Don’t talk money.”

Many of us have internalized shame and discomfort when it comes to “money talk.” However, opening up conversations about money allows all of us to learn from each other’s mistakes and make more informed financial decisions. Starting off with trusted family and friends, consider aiming for increased transparency around other taboo money topics (like discussing how much money you make with friends and coworkers).

“Buy this cryptocurrency!”

OK, this one is a little tongue-in-cheek. But it’s important to understand that crypto is inherently risky business, and anyone who insists on getting you to buy a specific cryptocurrency probably doesn’t have your best interests at heart.

You’re not crazy for erring on the side of caution with a relatively new, highly speculative investment.

Questions to ask yourself before considering taking financial advice

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

• What are their credentials? There is no fiduciary standard to becoming a “guru.” Check for certifications qualifications like a CPA (certified public accountant) or RIA (registered investment adviser). If they were born into wealth and have a history of trying to be an influencer in one way or another, be sceptical of their tips and tricks.
• Is this too good to be true? Generally, avoid “get rich quick” investment advice. Because if it were actually true, why would this person be sharing it with millions of people? If you can’t run it buy a financial advisor, at the very 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 import thing to consider before taking someone’s financial advice. Be wary of buying certain products or stocks, especially when the person recommending them is a stranger on the other end of a TikTok account. At the end of the day, no stranger is looking out for your finances out of the goodness of their heart if they can make a buck buy selling you something.