From neighbors to coworkers, most people have tidbits of financial advice they like to toss around. Unfortunately, those words of wisdom aren’t always so wise–even when coming from so-called financial pros. We asked our Financially Fit Bootcamp Coaches about the worst financial advice they’d ever received and how it impacted their lives. Here’s what they had to say:
“Using loans to pay for the expenses and living of life. I followed this from buying cars to homes, and credit cards. The impact it created was that I was living part of my life paying debts and paying banks, with interest of course.
“The worst advice I ever received was to pay for everything with a credit card to ‘boost my credit score.’ I think here in the US, we’re obsessed with credit scores and will do anything to get our number higher because we take it as a reflection of our personal worth. I did this in college and immediately did what most people do – spent much more than I was able to pay back. I often spent more than I needed to because of the idea that I’d pay it back ‘someday.’ Thankfully, I got fed up with making payments and the stress of seeing how much interest I was paying. I paid off my credit cards and haven’t touched them since.”
Wendy Priester, Owner, D&L Financial Coaching
“The worst financial advice I have ever received was being encouraged to buy a home without knowing how much is the right amount to spend. I was encouraged to borrow based upon the amount I could get instead of how much I could comfortably afford to pay.”
“My worst ever financial advice came from a free financial counselor, funded by the Australian Government. I went to the service to seek advice about getting some extra time to manage some debts and about how to get help setting up a clear budget to make the repayments while still be able to meet my everyday expenses. The first thing the counsellor suggested was we file for bankruptcy! After all, that is what everyone was doing at the time and it was an easy way out. We would not have to repay our debts and could live very comfortably moving forward – those are their words not mine. I was mortified….I left the appointment horrified at the suggestion. After all, we were not in that bad of a financial situation, I just needed some guidance and wanted someone else to deal with the companies and phone calls. After that, I put my head in the sand again for some months and finally came across Financially Fit Bootcamp and regained the confidence to seek further help.”
Melinda Smylie, Founder, Wear Kids Play
“I would have to say if I had seen a qualified person for advice (such as another advisor) then I wouldn’t have invested in [a certain company] and I wouldn’t have lost money. The funny thing is if someone had come to me and asked me as a financial advisor for advice on this company, I would have advised them not to invest in it. However we never really tend to look at our own situation through the same set of eyes and as I didn’t follow my own advice, I lost money. It just goes to show that we all make mistakes and it is usually when we don’t actually seek impartial advice. Often people think they may save a few dollars by not seeking advice, when in the long run it will actually cost them much more than if they had sought advice from a qualified professional.”
“The worst financial advice I received was when I was a child sitting on my dad’s knee and he said to me, ‘Susan, sometimes the more money people have the meaner they become.’ I held onto that piece of information throughout my life and was very loyal to it. The impact of it was that anytime money came into my life I got rid of it as quickly as I could. I did not want to be mean. I also gathered a whole lot of proof over the years as I witnessed people with money being really tight and mean or putting themselves above others that did not have money to come and go on. The family loyalty vow is very strong and in particular when it comes to money.”
“The worst financial advice I ever received was to invest in leveraged managed funds that were supposed to be designed to protect your value in times of a falling stock market. It turned out that the design feature to manage a falling market was to move money into cash and place restrictions on when it could be reinvested. The problem was that when the markets started to return to growth the money was tied up in cash and a lot of the growth opportunity to recover losses was missed. I followed the advice and in the end the markets returned the face value of the product with a small gain but my holding costs made the investment a big financial drain and loss.”
Community Question: Yikes! What’s the worst financial advice you’ve received and what were the the consequences of following it? Share with us in the comments below or in the Financial Foundations Community.
Some answers have been edited for length and clarity.