Bad Advice From Good Friends

I am fortunate to have a good group of friends who generally think about what they are doing with their finances. I also know that occasionally people will tell me to do things that I don't necessarily agree with when it comes to to my money. Now, just because I have not agreed with the advice doesn't mean that it isn't good advice. I have been given good advice before that I didn't agree with, and have learned to listen to the advice of my peers more. On the other hand, I have also been given very bad advice from my peers as well. Anyway, I came across an article that I found very important to share with you. It discusses some of the worst advice that your friends and family give you, and when to discredit what they say. Here are a few that stuck out to me.

If you get a raise, upgrade your life

Yes, raises can be nice, and sometimes they can come in big forms. If you are someone who works in retail,or food service and you get a job in your field, chances are you will get a decent pay raise. Instead of going off and upgrading your life, start saving the excess money instead. It is definitely nice to reward yourself with some nicer things, but don't necessarily start living a more expensive life just because you can. You will thank yourself later by keeping your living costs and expenses the same. Now, I am not implying you should live a bare bones life either, but don't increase your spending drastically as a result of making more money. It doesn't set yourself up for success, and if you save that money, it can be used for future big purchases like a house or car. More money in your account is always a good thing.

If you pay your minimum balance on your credit card, you'll be fine

Yikes! I hope you don't live this way. Technically this is true that as long as you pay off the minimum balance on your card you will be "okay". Unfortunately, "okay" in this situation means that you still have a balance that is going to be hit with interests charges. So in fact, you paying off only the minimum will hurt your more than helping you. While I realize there are certain things in life that are unavoidable, like putting a large purchase on a credit card because what you bought or paid for is a necessity, paying only the minimum balance should never happen. Get rid of that debt as fast as you can so you won't be paying a ton of interest.

Your credit score is only important for new cards or loans

This is also false. Your credit score could impact your life if you are trying to rent a car, rent an apartment, get interviewed for a job or even start using a new phone carrier. Did you know that most cell phone companies check your credit score to see if it is high or low? If you have a credit score that is low, it can effect what deals you get on phones and phone plans later on in life. All the more reason to make sure you pay off your credit cards as soon as you can (see above). The higher your credit score, the easier it is to get better loan rates and credit card rates, but it is also important for future endeavors. Don't set yourself up for failure and make sure your score is where it should be.

Check out the full list here. And remember, advice from friends can be really good...but it can also be very bad.

What's the worst financial advice you have ever gotten?

Seth P.