Not all advice is good advice. No matter how good an intention of our advisors, it is inevitable that some of their words of advice can do more harm than good.
If you are wondering how bad it can get, we have for you the 6 worst financial advice for women.
- “You don’t need to save yet. You need to live your life and enjoy your money while you are young.”
Why it’s a bad idea: First, it’s simple arithmetic – to start saving earlier means to have more reserved money for your future. Second, you are never certain of what may happen to you and your career like sickness, not getting that raise or promotion you were hoping for, changing of career direction, or losing a job. While we do not want to be extremely negative and paranoid, it is better to be prepared for every possibility.
Third, “young” is a relative term. When exactly does being “young” end? At what age are you old enough to be saving? What is bad is you may end up following this advice until you are only 10 years away from retiring.
A better advice? Save early, even if that means starting small. It is easier to begin with taking baby steps than promising yourself to get bigger chunks off your future paychecks just to catch up.
- “Renting is throwing away money; buying a house is a worthy investment!”
Why it’s a bad idea: Buying a house also means paying for other things like mortgage insurance, homeowners insurance, taxes, and maintenance costs; in a sense, these are also like throwing money away. What’s worse is if something goes wrong with your career when you are not yet done paying for this, you will end up having bigger debts.
This is especially so if the house is more than you can afford. Even if you buy something that you can afford, your choices of the property and location will also be limited. Another factor is how long you are planning to stay in that location; if you are planning to move or are in a job where you are required to move constantly, investing in a house early is a bad idea.
A better advice? Invest on a property of your own once you find a place you can live in for at least 5 years. Do not buy a house right after you get your first job; give yourself a few years to save and actually allot money for a property, separate from your other savings. This still applies even when you are planning to get a loan for it.
- “Conferences are a waste of time and money.”
Why it’s a bad idea: Whoever said this has no idea at all about the importance of learning and building a good network. It is essential for the progression of your career and financial life to learn new things, and what is a more convenient way than to attend a conference? As mentioned, you will also get to meet people of different fields and experts.
A better advice? Carefully pick the conferences you are attending and paying for. Take the time to research and know the details of the conferences. Is the theme of the conference helpful for your growth? Are the speakers competent and truly knowledgeable in their fields?
- “Once you get a job, apply for a loan immediately!”
Why it’s a bad idea: To keep it simple, the key is to not borrow money or get a loan without a goal in mind. You will end up spending it on unnecessary things. That enough would make you wonder where all the money went when it’s time to pay your debts.
A better advice? As mentioned, only get a loan when you actually have a goal in mind. Keep that loan allotted to that certain goal. It is also important to make sure you have a stable source of income before you do so. This is in order for you to be able to pay your debts regularly and on time.
- “Regularly use your credit card to keep a balance always to increase your credit score.”
Why it’s a bad idea: Credit utilization impacts your credit score less than you probably think. On top of that, there are also other factors which affect your credit rating, the most important of which is payment history. So listening to this advice without being able to pay for your credit regularly would do your credit rating more harm than good.
A better advice? The better advice would be to focus on paying your credit regularly and timely to get your credit rating up. You can do this by making sure to keep your credit on an amount you can actually pay for.
- “There is no such thing as too much credit!”
Why it’s a bad idea: The credit card is not free money; you will eventually have to pay for what you spent with it, probably with interests, too. If you listen to this, you will definitely end up debt-laden with a cancelled credit card and a bad credit history.
A better advice? As mentioned, use your credit card only when necessary. When you do so, make sure you actually have funds to pay for it. The key is to never spend more than you can actually afford, even with your credit card!
Throughout your life, you will get a lot of advice and words of guidance and counselling from family, friends, and colleagues – people of different age, backgrounds, and fields. While there is nothing wrong to listen to all kinds of perspective, what is important is for you to know to pick the good advice to follow from the bad ones from which you can just learn a lesson.
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).