If you want to improve your current financial situation, if you are going through a financial difficulty, or want to take your finances to the next level, it is important that you learn to differentiate between good and bad advice regarding money.
This is essential, because there are certain financial tips that everyone follows blindly, without knowing that they are blunders that will lead them to make costly mistakes.
For this, the first step is to know how to choose the people we listen to regarding the subject of money, and second, to know how to filter the information we receive daily, determine how it applies to our personal case, and study the possible results first before taking any financial decision.
Financial tips you should avoid at all costs
It is useless for you to follow recommendations without carefully analyzing your context, your current financial situation, your needs and your scope.
First of all, it is essential that you are clear about how you are financially; what are your income, your expenses, your level of debt, assets and based on this project yourself in complex scenarios like the ones we are currently experiencing.
Now, once you are clear about your financial picture, it is important that you know how to identify these “financial tips” that, although they may have a good intention, can lead you to have financial problems.
So, if you really want to achieve your financial freedom, pay close attention to these financial tips that you should review carefully before making any decision.
Financial tips that can lead you to lose money
The first thing you should know is that the investment strategies that others use may not be the most suitable for you, even if this makes you feel that you are not advancing financially.
The most important thing is to make financial decisions that are aligned with your financial objectives, that help you reduce your debts and increase your wealth.
1. Use credit cards with 0% interest
Although the idea of buying now and paying after 12 or 18 months without any interest may seem very attractive, this can be misleading because if you do not have a mindset of saving money responsibly, you could incur unnecessary expenses.
The idea of being able to buy what we want, without having the cash on hand, generates a dopamine sensation that is very dangerous.
People believe that having that possibility will make the fact that they will eventually have to face the debt they acquired disappear.
For this reason it is so important to have a personal budget, because in this way you will know which financial decisions you can make and which ones you cannot.
So do not fall into the commercial trap of acquiring an interest-free credit card, as normally these conditions will change and you will end up acquiring expensive debts, which choke your cash flow and lead you to financial difficulties.
This will surely save you big headaches in the future and you will begin to cultivate responsible habits about the use of your money, learning in the long term how to be a millionaire.
2. Wait for everything to improve before investing
Did you know that we are living through one of the times with the highest inflation worldwide? Do you know what this means for your pocket?
If you are following the financial advice to “wait for everything to get better to start investing” let me tell you that you are sitting watching your money lose value. Every day your money is worth less.
At what rate? This will depend on the inflation in your country.
So what can you do? If you have a high level of risk aversion, look for investment vehicles that guarantee a rate for a certain period of time.
The longer, the higher profitability. Although this could mean that you do not have access to these resources during the time of the investment.
In conclusion, the most important thing is that you have your money producing returns similar to or higher than inflation. Here are some ideas to save money in times of inflation.
2. It is too early to think about retirement
For many people, thinking about their retirement is unnecessary, since they trust that they will have other ways to finance their expenses and needs when that moment arrives.
However, this is a saving that does not make sense to pause, it may make more sense that you make contributions proportional to what you are earning, even if it is not the same amount every month.
In this way you will not put at risk a future that although we do not know, it is better to plan in the long term as digital millionaires do intelligently, for example.
Additionally, when you are consistent with your retirement contributions, they provide you with tax benefits that you can take full advantage of.
The invitation is very simple: Constantly ask yourself what financial decisions you can make today that will have a long-term impact on your life. For example:
The idea is that you sit down, investigate and make decisions based on real data, which will not only help you get through times of economic crisis, but also give you the foundation to build your long-term financial future.
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Do not follow any financial advice without analyzing it well
Finally, only you know what actions will be most beneficial for you, and although the experts generally know very well what they do, some conditions may be overlooked that would not be so positive for you.
Likewise, friends and family who, with the best of intentions, advise you what has served them, may end up becoming one of the worst financial advice you receive.
Continue reading: 10 immediate actions to improve your finances in 2023
