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You may have come to some point in your life when you had to go online to look for tips or advice on how to deal with your financial situation. There’s an abundance of these tips and advice on the web. However, before believing in them, know that not all of them can actually yield the benefits you are expecting. You need to be careful or mindful about the financial tips you are following.
The following are some of the money tips you have to view with some level of discernment.
This is perhaps the most overrated of all personal finance tips you can get. Becoming rich is not just about being frugal. You will see many blogs and readers agreeing on frugality as a major element in achieving better financial management. So what if you saved $10 by not having your meal out? Don’t overrate the small savings you get.
Good personal finance management is not just about cutting down on your spending or your lifestyle expenses. It is more of good decision making. Avoid focusing on your small “wins.” You may have saved on choosing that thinner bathroom tissue with the lower price tag but is that enough contribution to getting you rich? Emphasis should not be on frugality but knowing which actions will get you major “wins” as you strive to lower your expenses.
2. “ Expert” Advice and Insights
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Don’t count on money magazines or other mainstream publications to provide the best financial advice. Learn to diversify your sources for financial information. Don’t commit yourself to a particular financial planning policy just because it is what one article on CNN Money told you. Think of this reality. Finance magazines are primarily intended to sell magazines. Being able to sell sound ideas is only secondary in their goals.
Similarly, the supposed experts who appear on financial TV programs or segments cannot provide enough of the information and guidance you need to properly handle financial problems. You have to carefully examine your specific financial situation and find the right techniques that will work for you. What works for others may not be applicable to your situation.
3. It’s Never Impossible to Save
Many self-proclaimed personal finance gurus are fond of claiming this. No matter how tough your financial situation is, according to them, it is always possible to allot something for savings. Say what? This is of course unrealistic. How do you save without being responsible in paying your pending financial obligations and subsistence expenses?
Yes, there will be times when it becomes impossible to save. That’s why you need to learn to find new sources of income. Don’t obsess over the idea that your efficient money management skills can miraculously make an insufficient income suffice.
4. Obsessively Chasing “Bargain Deals”
There’s nothing wrong with buying something because it has been discounted. However, it does not make sense allowing your purchase decisions to be completely guided by “sales” or “bargains.” Don’t disregard the possibility of having savings by availing of discounts but don’t live a life penny pinching. You could be foregoing more important opportunities with your obsession for bargains.
5. Totally Shunning Credit Cards
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Credit cards are not evil. While it may have been the instrument for many to have drowned in indebtedness, it is a useful financial tool when used wisely. What’s important is to be responsible in your use of it. Besides, you can actually be lowering your credit score by not having a credit card. Just remember to be sure that you will exercise utmost prudence in your credit card use. You may avoid it if you really have a record of severe indulgence.
6. Not Spending for Recreation Because You Think Your Current Income Does Not Permit It
It is natural for humans to seek pleasure. Suppressing your desire for some fun by holding on to your money when it can be possible to spend some for a little recreation is not advisable. The usual tendency for people who are not inherently stingy is to rationalize their rare binging and overspending with the thought that they have been spending barely nothing for the rest of the year.
This usually leads to significant problems in budgeting and financial planning. It is important to have a sense of balance. Some truly stingy people successfully keep their expenses to insanely low levels without breaking down because it is really their nature to handle money that way. It’s different when you are only trying to be stingy because your situation demands that you should. Trained mindsets can go astray and ruin your financial plans.
As you read personal finance tips or insights, don’t assume that everything the “experts” say make sense. Learn to understand how a tip can be applicable to you. Get a glimpse of the bigger picture. Consult other people’s advice and carefully decide on how to make sense of all the financial knowledge and insights you have been getting.