6 useless money advice society taught us all

As kids, we have all done strange things to save our money. You probably put your money in that little red plastic post-office box or someone held it for you. You would have put some coins in it every time you had some change or might have deposited your Diwali money to use it once you were 18. But when you turned 18 and spent two months in college, you probably realized how stupid you were to think that the piggy-bank money would serve you for an entire year, let alone a few months. Or someone might have told you to hold on to those old coins coz they would be worth a lot of money someday, and even though it has been years since you held them, you still don't get why someone would give you that advice.

Here is some terrible money advice that the society really needs to stop doling out: 

1. JUST 'SAVE IT' IN YOUR BANK

Say a little boy earns 5 coins a month and his financial advisor tells him to save these 5 coins every month. His advice goes like this: ''Child, save this money (nothing wrong with this), no more Ironman movies or Batman toys for you. Also, let's create a budget.'' Now, this advice repeats every month.

So basically at the end of the day, the advisor is teaching the boy to focus only on those 5 coins. The problem is the advisor expects the boy to make more money only by using those 5 coins. But the boy doesn't have a saving problem (coz he can save all 5 coins in his plastic post office box). The problem is that he has an income problem because he isn't being taught how to get 5 more coins FASTER. 

Here's the thing: even if you save, and invest your money in stocks, it will probably not be enough to buy a new home, completely finance your education, or enough to buy a car. So move the focus from saving those 5 coins and shift your focus to 'How to make 5 more coins every year and faster.' If you make 5 coins in 12 months, focus on how to make those same 5 coins in 9 months, then 6 months, then 3 months, and so on. Learn and develop skills that will get you a higher income or start a side hustle. 

2. MORE EDUCATION = MORE MONEY   

This was true once upon a time, but not anymore. Today, education is getting more expensive than ever and a student loan is positioned as good debt because it is treated as an investment in yourself. But when students take on student debt, they aren't really taught to calculate the cost-benefit ratio of taking this loan  (it is difficult in today's ever-changing world). Also, no one really guarantees a 6 figure job anymore, do they? Debt always seems easy until you get it. Students need to check today if real-life experience or a lesser expensive course can give them more advantages than paying for an expensive degree, especially since repaying student loans takes years. Unless you know for sure that you will get a 6 figure job once you get out of college, taking a student loan needs to be thought out twice. 

3. DON'T SAVE UNLESS YOU REPAY YOUR DEBT

People may gasp at the idea of having a good saving balance because so many people believe that they have to pay off their entire debt before they start saving seriously. But a person's first priority should always be to have a 3-6 month emergency fund set up. This can take care of them no matter what happens and can also help you avoid ruining your finances in case a job loss or an illness hits you out of the blue.  

So, if you have a loan, it doesn't mean that you have to either defer paying your loan or pay the minimum required amount and save the rest. Once your emergency fund is set up, prioritize your loan repayments, create a retirement fund and have better investments.  

4. HAVING A CAR AND A HOME MAKES YOU A SMART PERSON 

Families treat a home and a car as assets and safe investments and hence your parents must have listed this as one of your life's milestones too. Also, isn't renting equivalent to flushing your money down the toilet?

Well, an asset is anything that puts money in your pocket. So when you buy a home or a car, are you really receiving money? No, cash goes out. Also if you buy these via a home loan or a car loan, you will be forcing yourself to pay EMIs for the next 20 years. You will also have to pay additional interest expenses when you go for the loan, how exactly is this an asset?

Though owning a home is valuable in different non-financial ways, your home investment is also vulnerable in different ways (unlike your mutual funds and index funds).  Buying a home can be a great investment if your home appreciates over a period of time or the cost of buying it is lesser than getting it on rent, or you want to buy it at a lesser price, work on it and sell it at a large margin. 

5. INVESTING IS SO TOUGH & MESSY

When you open the website of NSE or BSE for the first time and a number of new terminologies stare at you, you are bound to feel overwhelmed. Someone who is from a rural area might feel the same amount of overwhelm when they open, say a Nykaa website. The jargon, the industry, and the way it works might be challenging at first (and even boring), but learning about it today is very easy.

Though financial education might have been tough during our parents' time and they may have avoided it altogether to avoid getting caught up in scams, learning it is really simple today. Especially for moms and the ladies of the house, it is essential that they learn what their male counterparts learn.

6. CREDIT CARD IS BAD!

If you don't have the discipline to use a credit card ie you borrow more than you can repay, you do not repay on time or you struggle to stay within your personal limit, then a credit card can be bad news (even when your limits are smaller). Your credit card can, in all honesty, throw your finances for a toss if your money-using habits, your money beliefs, and your actions are unaligned. But if you do have a way to use your credit card in a disciplined manner, you can use it as a wonderful tool to get cashback on your normal purchases, receive lounge benefits and collect mile points at airports, and use it for emergencies.