6 Worst Financial Suggestions Your Friends Could Offer You

Our friends are the backbone of our support system. They provide us with advice whenever we encounter challenges in our job or relationships, and they also play a significant role in our money management. However, some of the worst financial suggestions come out of the mouths of our closest friends. Here are six financial tips that you shouldn’t take from them that can end up hurting your wallet in the long run.

1. “If you can afford it, go and buy it.”
Peer pressure is common in all aspects of our lives, including spending money. When you’re with your friends, you may feel tempted to fall into the trap of lifestyle inflation. You might begin to think that you can buy anything and everything, regardless of whether you really want or need it, just because you can afford to do so. For example, if your friend is wearing a branded dress you don’t like the style of, you might feel compelled to buy it too, just to show that you have enough money.

However, this kind of peer pressure can lead you down a slippery slope. Instead, take time to evaluate a purchase before making it. Try to consider whether it’s something you really need or just something you want. Remember to stick to your budget and needs rather than succumbing to peer pressure.

2. “Use your credit card all the time – it’s free money!”
One of the worst financial suggestions you can get is to use your credit card for things you can’t afford. Some people tend to believe that credit cards are like free money handed out by a generous fairy godmother. In reality, credit cards can be very expensive if used carelessly.

Using a credit card for something you can’t afford can lead to long-term negative effects such as being blacklisted by banks, being denied loans in the future, and receiving a poor credit rating. Instead, practice responsible credit card usage by reading the fine print before signing up for a credit card, and using it only for purchases that you can afford to pay for with cash.

3. “Take as much time as you want going to college, it’s worth all the debt anyway.”
Yes, going to college is noble, but only if it serves your career goals. If you’re just going to study because you can’t find a job yet or because you’re not sure about your passion, then it might not be the best decision. Consider the opportunity cost of going to college. How much money could you have earned working instead of studying?

It’s important to think carefully about the value of college education and whether the debt incurred is worth it. Instead, try to think about alternative paths such as starting a business, joining apprenticeships or seeking out vocational courses beforehand.

4. “Want easy money? Put all your money in ABC Inc.”
Investing always carries a risk, and diversifying your investments is the key to successful financial planning. Diversifying means that you don’t put all your eggs in one basket. Instead of putting all your efforts and your life savings into stocks or one company, spread out your money across different companies and industries.

Take this one step further and hold different securities, such as treasury bills and term deposits too. This way, you can manage risks and protect your wealth in the long term.

5. “Let’s travel luxuriously. We’re only young once.”
You might have heard the saying, “It’s easier to earn money than to earn moments”. While it may be true, it doesn’t mean that you have to spend all your money on luxurious travel. Traveling should always be about experiencing new cultures and immersing yourself in new ways of life, not merely checking in at five-star hotels and eating at overpriced restaurants.

Instead, try to save on travel expenses and find ways to travel on a budget while still enjoying yourself. You might even learn something new in the process.

6. “Just save and you’ll be fine.”
Saving is vital, and it’s the first step up the financial ladder. But saving alone might not be enough. If you want to manage your money wisely and let it work for you, don’t just settle with saving. Start investing in your knowledge by reading up on personal finance books or following market trends. Then, save enough money for you to start an investment account.

While friends may have our best interests at heart, it’s important to consider whether they’re financially savvy enough to be dispensing advice. If in doubt, it’s always good practice to seek the counsel of a professional financial advisor for better insight and guidance.

Conclusion

These are just some of the worst financial suggestions that you should not listen to when coming from your friends. In personal finance, caution and common sense go a long way. Knowing when to say no to financial advice that’s not in your best interest can save you from experiencing the negative consequences of bad financial decisions. Being financially smart, you can make your wealth work for you and experience peace of mind in the long run.