The Worst Money Advice: Part 1

The Worst Money Advice - GoDay.ca

I recently saw a meme on Pinterest (how many conversations start like that?) of a little girl squinting and looking off into the distance. The caption oh-so eloquently said, ” have you ever talked to someone so stupid it made you squint?”.

If that could be applied to stupid things, then absolutely.

Bad advice comes in all forms, but when it comes to money the wrong advice can be hurtful or even down-right dangerous. To help keep you safe, here’s a list of some of the dumbest money management suggestions ever whispered.

If that sounds judgemental, it’s because it is.

“If you aren’t living paycheque to paycheque, you don’t need a budget”.

Say what? Firstly, I don’t really understand why budgets have such a horrible reputation, as if there’s some kind of stigma that goes along with being responsible and completely aware of where your money is and goes at all times.

Just because you might be fortunate enough to have a surplus does not mean you shouldn’t have a financial roadmap.

This goes double for those without any debt. You’re not any more “free & spontaneous” with your money when you don’t have a guideline. Having rules gives you the security to spend within them. How so? What if you end up spending too much? On comes the guilt, right? A budget is one of those perfect examples that illustrate how restrictions can actually give you perfect freedom.

“Buying in bulk actually costs you more money”.

This is one of those sayings that clearly had no real thought put into it. While some things certainly can cost more in bulk, it’s generally if and only if the product is wasted. This typically applies to spoiled food. If you know you’re not going to be able to eat that huge bag of carrots before they turn into orange mush, then simply don’t buy them because otherwise you might as well take that money and throw it directly into the trash.

However, the wisdom in bulk is mainly dependent on two criterion; how many people the product will be serving & how much is needed.

Products that don’t spoil, such as laundry detergent, shampoo & conditioner, waste bags, hygiene products, toilet paper & even pain medicine are perfect examples of when buying in bulk will save you money. You’ll always need those things and they won’t go bad.

In terms of perishable food, if you’re lucky enough to have a big (or extra) freezer, getting your meat in bulk would be far more cost effective than paying full price for a tiny tray. This especially counts in the summer. Stocking up on fresh veggies and fruit and freezing them for winter use is an excellent use of your food budget, when you know everything will inevitably skyrocket in the colder months. 

“I don’t need an emergency fund. That’s what my credit card is for”.

Yes. Yes, you really do need a separate emergency fund.

Do you carry a balance on your credit card? If so, you may not be able to rely on your line of credit to have the amount of money that you need. Additionally, the conventional wisdom is that you should have up to 6 months worth of living expenses  saved up. Considering the average salary of a working Canadian, you would have to have an enormous credit card limit for that to work out in your favour.

This wisdom applies to even small emergencies, however. If you’re carrying a balance, remember that you’re paying interest on that every month, aka: money out the window. Do you really want to end up paying more interest for an unknown amount of time in the event you have to use your credit card for a big emergency? Isn’t it easier to just put $20 away every week? After a year, you’d have ~$1000 saved for anything last minute; interest free.

It might be a bit of a stretch to say “don’t carry a balance”, but if you have to live with a credit card balance and you also want to save, try splitting your budget to do both, or cut back on your discretionary fund just a little. Accidents happen every day and not being prepared for them is just inviting trouble.

Have we missed anything? Let us know the most atrocious things you’ve heard on Facebook & have yours featured in the coming months!

 

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