I was trolling Facebook as usual while thinking up more useless way to procrastinate when I fell on a post saying your 25-30s is a time spent cleaning up the financial mess of your early 20s. That got me thinking of all the rampant unsolicited financial advice I got from people before going to college. And how in hindsight, none of that make sense. It's no wonder half of college graduates leave with massive debt and no clue on how to manage their finances. Here are seven financial myths that you should toss long before the grad cap.
CREDIT/DEBT IS BAD
Hate to tell you this but, you probably got this advice from a person with a bad relationship with credit. Only bad debt is bad, but good debt is good, thanks for listening to my ted talk! But hear me out, by good debt I mean a credit card balance which is paid off every month or a car note on automatic payment, being paid on time every month. Starting to make sense? Building good credit history settling debts on time is a super unsexy yet easy path to riches.
CREDIT CARDS ARE FOR EMERGENCIES
Absolutely not! That's what your emergency fund is for. That's how people develop a bad relationship with credit. It's not for when your car breaks down out of nowhere. It's for the Mondale stuff you regularly budget for. I'm talking gas, movies, and two for ones on taco Tuesdays or whatever. It's for the simple everyday purchases that will help you rack up points.
CASH IS KING
Maybe back in the early 2000s but now buying online can be much more efficient then spending cash. Why? Because oftentimes before making a purchase you can compare price in different sites and look for discount codes before committing. Also there are a number of budgeting and money tracking apps to flag you down and add up those late night amazon session for you. More like Netflix and Buy Now, I see you.
EXTENDED WARRANTIES ARE WASTEFUL
Yeah sure, and that $500 Xbox is totally going to make it through those ABC Greek parties unscathed. Listen I worked for a major retailer and used to get those calls from dumbfounded customers who couldn't believe they were SOL when their brand new flat screen pooped out a week after taking it home. Also, those extended warranties usually take effect after the manufacturers' expires, so the total coverage can be upwards of 4 years. Image that $600 blender or yours dies three years into your smoothie relationship only to resurrected for free, or for a fraction of its price because you shelled out an extra 20 bucks at purchase.
SAVE NOW INVEST LATER
Let's be honest, at 20 what are you really saving for? Probably not a house, maybe your wedding… cuz it's cuffing season? I'm definitely not knocking saving money, it's a good idea and worth it but now you're not really thinking about the big stuff that becomes relevant down the line. Although you're not in your cushy corporate job yet with the sweet 401K match. You'll still be better off starting a Roth IRA and stashing away what you can. Even if it's $20-$50 a month.
USE LOANS TO SUPPLEMENT FIN AID
No, just no. Use loans as a last resort, there are other ways to pay for college. Get a summer job, look for grants, and scholarships. There are scholarships for every race, color and creed. There are scholarships for every major and there are scholarships for your random AF hobbies. They just don't come delivered in your inbox asking you to sign and collect the money in a few weeks time. You have to find them.
PAY OFF YOUR BILLS FIRST
Here's the thing, skipping two car notes is the fastest way to get back on your feet. I'm not advocating anyone skip paying their bills for the sale of saving money or blowing it in an unnecessary want. However the reality is the older you get the more bills you accumulate. Get in the habit of paying yourself first. Pay yourself by regularly funding your saving/emergency fund. Pay yourself by investing in your mind and well-being. Invest in a guitar lesson, wellness retreat or counseling. Fund your IRA or other investment accounts. Don't let your paycheck exist just to pay your bills and make it through the month. It's your money and you worked hard for it. Now go buy that bag, no the one the clearance rack…
StableDiffusion
StableDiffusion
StableDiffusion
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