6.25.2012

Bad Financial Advice From My Parents

So, we've all heard bad financial advice before. What about the financial information that comes out of your parents' mouths? Do you believe it all? When I was younger (and probably until I was 21), I thought my parents were right about everything. Most of the time they were, but when it comes to finances, I got the basic gist of saving and budgeting from them, however a lot of other pertinent details about investing, debt, and money making are just out of their element and I made my own decisions based off of plenty of research. I had to (and still have to) make decisions for myself and my life based on my current situation and my needs, not based off of my parents' lifestyle.

Although I am highlighting some bad financial advice that I, luckily, figured out on my own, this is not to say that they haven't given me other solid advice. 99% of the time they do!

I hope my parents don't read this.

If you are, know that I love you guys even though I get some bad advice here and there.

My mom and dad (stepdad) at a wedding last month! Haha, they're so silly.

Bad Financial Advice From My Parents

  1. "Everyone gets into debt, everyone gets out of debt."
    Really? Everyone?! I don't think so. A lot of people struggle with debt, and I may not be able to get out of debt in the future. I'm not sure how EVERYONE does it! I'm not sure if I just read too many PF blogs, but I'm so freaking scared of debt and I am going above and beyond just to avoid it or reduce the amount of debt I will get myself into. I truly don't believe that everyone gets out of debt....it's not that easy.

  2. "You don't need a 401k right now, why do you have one already?"
    I was told this when I started contributing a lot towards my 401k and then opened up a roth IRA to invest more towards retirement. My philosophy is - save as much as I can now towards retirement since I don't need the money anyway. I would just be tempted to spend it. My mom didn't start one until 30 and my dad has one through the Navy so I guess they are not really too worried about it, or they didn't really think of the benefits of time and compound interest.

  3. "Don't be afraid of debt."
    But how can I NOT be afraid of debt? When I was getting cold feet about going to law school because of the loans I would be taking out, they coaxed me into thinking that I was just afraid of debt. They think that me not having any debt at all from undergrad is the reason why I am so afraid of being in debt. The truth is, debt is scary, no matter how much you have. It's a burden that stays with you...not to mention the interest, and what you could be buying with the money spent on paying back debt.

  4. "Open up a lot of credit cards to build credit."
    After listening to this advice I ended up with a bunch of store credit cards that I forgot I even had. I was 18 at the time. I don't use them anymore and never even really used them! I built my credit with just one Citibank credit card, and it was a student card. I used it for everything for 4 years before moving on and finding the perfect 2 credit cards and working out the best system to maximize my spending/rewards. My mom and dad now have the same cards after my recommendation!

  5. "Making money is easy later. You're just a negative thinker."
    This was the response I got after I sent them both an email listing out the amount of loans I would need to take out, the fixed interest rate, and the monthly payments I will be making based off of a 15-year and 30-year loan. Student loans never leave you, I remember typing. You can't even claim bankruptcy because of student loans.

  6. "Get an iPad."
    For my 24th birthday last November, I really wanted a Kindle Fire or just a regular Kindle or Nook. I like to read. I have my phone that has all of those cool apps that I really need. My parents convinced me I absolutely needed an iPad instead because they have one and it is the most-used gadget in the house. For me? I barely touch mine. I use it for Facetime with my little sister and Flipboard for when I'm browsing websites in bed. I don't really do that though, so it was a huge waste of money for me. They even paid for the difference between a Kindle Fire and the iPad so I basically only paid $200 for it, and I still don't *love* it.

  7. "Invest in Apple."
    Three years ago, my dad asked me about investing. He wanted to get more involved in the stock market since he hasn't really done so before. His first idea was to invest in Apple. At the time, he knew nothing about it besides the fact that everyone was doing it and they were seeing great returns. Just because everyone else was doing it, doesn't give us a good reason to do the same. We should always do our own research, especially since we don't want to go investing blindly and ignorantly.

  8. "After you become a lawyer, you will be able to pay off those loans easily."
    I'm sure lots of parents think this way, whether you become a doctor, lawyer, engineer, or whatever profession they think of as automatically "rich." It's not the case anymore. People are competing for jobs and I am preparing for the worst. I may be thinking negatively but at least I am preparing myself for what's to come and how to reduce the amount of loans I have to take out, and how them off as quickly as possible.

  9. Dad goes to Starbucks everyday.
    Lol. Just a bad example. I can already envision how much they spend on Starbucks each month, calculating how much they could save. I think he has since cut down (or maybe he just doesn't go twice a day now), but I know he still loves Starbucks more than homemade coffee..even after an expensive espresso machine was purchased!
There ya have it. 9 things that I learned from my parents that I simply brushed off. It's okay to go against what your parents tell you...it's okay to make your own decisions, and it's okay to have your own opinions even if they are different from theirs. Sometimes they can make you feel like you *need* to listen to them, but sometimes they can learn from you too!

Don't worry, they have taught me a ton about finances though...a bare bones budget lifestyle, quality over quantity, saving as much as possible, investing in property, negotiating, and a bunch of other things that I'm sure you all already have heard a ton of times so I won't get into that. Maybe another blog post is necessary for those lessons!

What kind of bad financial advice have you heard from your parents?

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